Design of Logistic Concepts for Wood Biomass Supply Chains for District Heating Plants in Municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš

Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš

prepared for:

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH DKTI- Development of a Sustainable Bioenergy Market in Serbia Bože Jankovića 39 11000 Beograd

Prepared by:

Damir Đaković, PhD Branka Gvozdenac Urošević, PhD Dragan Urošević, PhD

January 2015

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ...... 4 LIST OF TABLES ...... 5 LIST OF FIGURES ...... 8 1. EXECUTIVE SUMMARY ...... 9 2. INTRODUCTION AND OBJECTIVE OF THE STUDY ...... 10

2.1 SERBIAN LAW REGARDING THE USE OF BIOMASS ...... 10 2.2 PURPOSE OF THE STUDY ...... 11 3. METHODOLOGY ...... 13

3.1 DESK RESEARCH ...... 13 3.2 INTERVIEWS ...... 13 3.3 ASSESSMENT OF AVAILABLE WOODY BIOMASS ...... 13 3.4 MODELING LOGISTICS OF BIOMASS SUPPLY CHAIN ...... 14 4. STAKEHOLDERS IN BIOMASS SUPPLY CHAIN ...... 15

4.1 ANALYSED MUNICIPALITIES ...... 16 4.1.1 Priboj ...... 16 4.1.2 Novi Pazar ...... 17 4.1.3 Bajina Bašta ...... 19 4.1.4 Nova Varoš ...... 20 4.2 SURVEY OF DISTRICT HEATING SYSTEMS FOR ANALYSED LOCATIONS ...... 20 4.2.1 District heating system in Priboj ...... 21 4.2.2 District heating system in Novi Pazar ...... 25 4.2.3 District heating system in Bajina Bašta ...... 29 4.2.4 District heating system in Nova Varoš ...... 34 4.3 WOODY BIOMASS SUPPLY ...... 38 4.3.1 Potential of woody biomass in Priboj municipality ...... 38 4.3.2 Potential of woody biomass in Novi Pazar municipality...... 44 4.3.3 Potential of woody biomass in Bajina Bašta municipality ...... 47 4.3.4 Potential of woody biomass in Nova Varoš municipality ...... 55 4.4 WOOD CHIPS PRODUCERS ...... 61 4.4.1 Wood chips producers in Priboj municipality ...... 62 4.4.2 Wood chips producers in Novi Pazar municipality ...... 63 4.4.3 Wood chips producers in Bajina Bašta municipality ...... 65 4.4.4 Wood chips producers in Nova Varoš municipality ...... 67 4.4.5 Other important woody biomass users ...... 67 5. MODELLING OF A BIOMASS SUPPLY CHAIN ...... 72

5.1 BACKGROUND DATA AND INFORMATION ...... 72 5.2 COSTS ESTIMATION IN BIOMASS SUPPLY CHAIN ...... 76 5.3 DESIGNING POTENTIAL BIOMASS SUPPLY CHAIN MODELS ...... 79 5.3.1 Designed Model No. 1 ...... 80 5.3.2 Designed Model No. 2 ...... 81 5.3.3 Designed Model No. 3 ...... 81 5.3.4 Designed Model No. 4 ...... 81

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5.4 DESIGNED POTENTIAL BIOMASS SUPPLY MODELS ...... 82 5.4.1 Proposed biomass supply models for heating plant in Priboj ...... 82 5.4.2 Proposed biomass supply models for heating plant in Novi Pazar ...... 89 5.4.3 Proposed biomass supply models for heating plant in Bajina Bašta ...... 97 5.4.4 Proposed biomass supply models for heating plant in Nova Varoš ...... 104 5.5 DESIGNING INTEGRATED MODELS OF BIOMASS SUPPLY CHAIN ...... 110 6. SELECTION OF OPTIMAL MODELS OF BIOMASS SUPPLY CHAIN ...... 114

6.1 PROPOSED OPTIMAL MODELS ...... 114 6.1.1 Optimal supply model for Priboj municipality ...... 114 6.1.2 Optimal supply model for Novi Pazar municipality ...... 115 6.1.3 Optimal supply model for Bajina Bašta municipality ...... 116 6.1.4 Optimal supply model for Nova Varoš municipality ...... 117 7. CONTRACTING ...... 119

7.1 MODEL OF CONTRACTS BETWEEN A DISTRICT HEATING PLANT AND A BIOMASS SUPPLIER ...... 119 7.2 MODEL OF CONTRACTS BETWEEN BIOMASS SUPPLIERS AND OWNERS OF RAW MATERIALS ...... 123 8. OVERVIEW OF OBSERVED SITUATION AND IDENTIFIED LEGALE OBSTACLES ...... 126

8.1 MUNICIPALITY PRIBOJ ...... 126 8.2 MUNICIPALITY NOVI PAZAR ...... 127 8.3 MUNICIPALITY BAJINA BAŠTA ...... 129 8.4 MUNICIPALITY NOVA VAROŠ ...... 130 8.5 COMPANIES OUTSIDE ANALYZED MUNICIPALITIES ...... 130 9. ENVIRONMENTAL AND SOCIAL IMPACT ...... 131

9.1 ENVIRONMENTAL IMPACT ...... 131 9.2 SOCIAL ISSUES ...... 132 10. CONCLUSIONS ...... 133 11. REFERENCES ...... 134

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LIST OF ABBREVIATIONS

°C Degree Celsius (temperature)

CO2 carbon dioxide EUR, € Euro RSD Serbian dinar h hour ha hectare kg kilogram km kilometre kW kilowatt kWh kilowatt hour l litre m meter m² square meter m³ cubic meter MW Megawatt MWh Megawatt hour M moisture content on wet basis t metric tones bcm bulk cubic meter th thermal a annual PC public company HFO heavy fuel oil Ltd. limited liability company FA Forest administration office FE Forest estate DHP District heating plant BSC Biomass supply chain PPP public-private partnership pc piece

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LIST OF TABLES

Table 4.1: Heating plant PC “Toplana Priboj” main characteristics; Source: PC “Toplana Priboj” Table 4.2: Heating plant in Priboj - demand side Table 4.3: Fuel consumption of the last 3 years in heating plant in Priboj; Source: PC “Toplana Priboj” Table 4.4: Heating plant in Priboj boilers’ efficiency Table 4.5: Lower heating value of the fuels; Source: PC “Toplana Priboj” Table 4.6: Storage capacity of “Koran” company Table 4.7: Main characteristics of heating plant PC “Gradska toplana”; Source: PC “Gradska toplana” Table 4.8: Heating plant PC “Gradska toplana” Novi Pazar - supplied area Table 4.9: Fuel consumption of last 3 years in “Centralna” heating plant Novi Pazar; Source: PC “Novi Pazar” Table 4.10: Heating plant “Centralna” Novi Pazar boilers’ efficiency Table 4.11: Lower heating value of used fuels; Source: PC “Gradska toplana” Table 4.12: Storage capacity for heating plant “Centralna” Table 4.13: Heating plants in Bajina Bašta main characteristics; Source: JP “BB Term” Table 4.14: Heating plants in Bajina Bašta – demand side Table 4.15: Fuel consumption of the last 3 years in heating plants Bajina Bašta; Source: JP “BB Term” Table 4.16: Heating plants in Bajina Bašta boilers’ efficiency Table 4.17: Lower heating value of the fuels; Source: JP “BB Term” Table 4.18: Storage capacity of biomass in Bajina Bašta Table 4.19: Boiler stations Nova Varoš main characteristics; Source: PC “Energija Zlatar” Table 4.20: Boiler rooms in Nova Varoš - demand side Table 4.21: Average fuel consumption in heating plants “Pošta” and “Branoševac”; Source: PC “Energija Zlatar” Table 4.22: Storage capacity – new biomass boiler Nova Varoš Table 4.23: Forest area in Priboj municipality Table 4.24: Planned harvesting amounts in 2009 for public forest in FA Priboj; Source: [12] Table 4.25: Participation of industrial wood, firewood as well as wood residue in planned harvesting amount for public forests in FA “Priboj”; Source [12] Table 4.26: Participation of industrial wood, firewood as well as wood residue in planned harvesting amount for private forests in FA “Priboj”; Source [12] Table 4.27: Total annual amounts of available woody biomass from private and state forests managed by FA “Priboj” Table 4.28: Balancing of wood biomass in sawmill Table 4.29: Total and available biomass quantity in Priboj municipality available for this project Table 4.30: Available energy potential of woody biomass in Priboj municipality Table 4.31: Distances from field storages to the city Table 4.32: Pricelist of wood products in PC “Srbijašume“ for 2015; Source: PC ”Srbijašume” Table 4.33: Forest area in Novi Pazar municipality Table 4.34: Calculated quantities of collected wood and uncollected wood residues in FA “Novi Pazar” Table 4.35: Balancing of wood biomass in sawmill Table 4.36: Total and available biomass quantity in Novi Pazar municipality available for this project Table 4.37: Available energy potential of woody biomass in Novi Pazar municipality Table 4.38: Distances from the storages to the city Novi Pazar Table 4.39: Forest area in the municipality Bajina Bašta Table 4.40: The harvesting plan for 2015 at PC “National Park Tara” for public forests; Source: PC ”National Park Tara” Table 4.41: Calculated quantities of collected wood and uncollected wood residues Table 4.42: The selling plan of wood products for 2015 for PC “National Park Tara” (public forests); Source: PC ”National Park Tara” Table 4.43: The selling plan of wood products for 2015 in PC “National Park Tara” for state forest; Source: JP ”National Park Tara”

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Table 4.44: Approved for harvesting of private forest in 2013; Source: PC ”National Park Tara”, Service for private forest management Table 4.45: Total annual amounts of available woody biomass from private and state forest managed by the PC “National Park Tara” at the territory of Bajina Bašta municipality Table 4.46: Woods used in sawmill industry at the Bajina Bašta municipality; Source: PC “National Park Tara”, “Wood produkt” Ltd. Bajina Bašta Table 4.47: Total and available biomass quantity in municipality Bajina Bašta available for this project Table 4.48: Available energy potential of woody biomass in municipality Bajina Bašta Table 4.49: Share of annual planed harvest of state forests at PC “National Park Tara” expressed in quarters during one year Table 4.50: Distances from field storages to the central storage in Bajina Bašta Table 4.51: Pricelist of woody products in PC “National Park Tara“ for 2015; Source: PC ”National Park Tara” Table 4.52: The end users of woody biomass sold by PC “National Park Tara”, Source: PC ”National Park Tara” Table 4.53: Pricelist of transport and other services of PC “National Park Tara“ for 2015; Source: PC ”National Park Tara” Table 4.54: Forest area in the municipality Nova Varoš Table 4.55: Planned harvesting amount in 2009 for public forest in FA Nova Varoš; Source: [12] Table 4.56: Participation of industrial wood, firewood as well as food residue in planed harvesting amount for public forest in FA “Nova Varoš”; Source [12] Table 4.57: Participation of industrial wood, firewood as well as food residue in planed harvesting amount for private forest in FA “Nova Varoš”; Source [12] Table 4.58: Total annual amounts of available woody biomass from private and state forest managed by the FA “Nova Varoš” Table 4.59: Balancing of wood biomass in the sawmill Table 4.60: Total and available biomass quantity in municipality Nova Varoš available for this project Table 4.61: Available energy potential of woody biomass in Nova Varoš municipality Table 4.62: Forest openness in FA “Nova Varoš” Table 4.63: Distances from field storages to the Nova Varoš Table 4.64: End users of woody biomass sold by PC “National Park Tara”, Source: PC ”National Park Tara” Table 4.65: Technical specification of wood chips EN 14961 Table 4.66: Logistics of raw material and products Table 4.67: Logistics process of raw material and products Table 4.68: Quantity of input raw material – “Wood Produkt” Ltd. Table 4.69: Share of delivery quantity of input raw material during year – “Wood Produkt” Ltd. Table 4.70: Logistics of raw material and products Table 4.71: Prices of raw material in “Star Jela” Table 4.72: Wood chips production in “Star Jela” Table 4.73: “Star Jela” company technical equipment Table 4.74: Logistics of raw material and products in “Star Jela” Table 4.75: Equipment of “Holz-Tim” Table 4.76: Evaluate prices of input raw material Table 4.77: Customers and prices in company “Holz-Tim” Table 5.1: Brief overview of wood biomass supply and demand in Priboj, Novi Pazar, Bajina Bašta and Nova Varoš municipalities Table 5.2: Estimated cost of wood chips regarding the working phases Table 5.3: Overview of prices regarding equipment, infrastructure, raw material and processes Table 5.4: Needed investments in Model PB-1a Table 5.5: Needed investments in Model Pb-1b Table 5.6: Needed investments in Model Pb-2 Table 5.7: Calculated cost of working phase in BSC Model Pb-2 Table 5.8: Needed investments in Model Pb-4 Table 5.9: Calculated cost of working phase in BSC Model Pb-4 Table 5.10: Needed investment in Model NP-1a Table 5.11: Needed investment in Model NP-1b Table 5.12: Needed investment in Model NP-2 Table 5.13: Calculated cost of working phase in BSC Model NP-2

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Table 5.14: Needed investment in Model NP-4 Table 5.15: Calculated cost of working phase in BSC NP-4 Table 5.16: Needed investment in Model BB-1 Table 5.17: Needed investment in Model BB-2 Table 5.18: Calculated cost of working phase in BSC Model BB-2 Table 5.19: Needed investment in Model BB-4 Table 5.20: Calculated cost of working phase in BSC Model BB-4 Table 5.21: Needed investment in Model NV-1 Table 5.22: Needed investment in Model NV-2 Table 5.23: Calculated cost of working phase in BSC NV-2 Table 5.24: Needed investment in Model NV-4 Table 5.25: Calculated cost of working phase in BSC Model NV-4 Table 5.26: Needed investment in integrated model Table 6.1: Investments and costs in biomass supply chain models in Priboj municipality Table 6.2: Investments and costs in biomass supply chain models in Novi Pazar municipality Table 6.3: Investments and costs in biomass supply chain models in Bajina Bašta municipality Table 6.4: Investments and costs in biomass supply chain models in Nova Varoš municipality Table 7.1: Price settlement based on the produced amount of heat – advantages and disadvantages; Source: [17] Table 7.2: Price settlement based on the supplied weight – advantages and disadvantages; Source: [17] Table 7.3: Calculation of the wood chip price is based on moisture content. The input price is used as an example Table 7.4: Price settlement based on the supplied volume – advantages and disadvantages; Source: [17] Table 7.5: Calculation of the wood chip price is based on moisture content (Price is used as an example.) Table 7.6: Example how to determine quantities, qualities and delivery schedule Table 9.1: Emission of CO2 when burning different types of fuel [7] Table 9.2 Possible annual reduction of CO2 in tones

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LIST OF FIGURES

Figure 4.1: Photos of possible storage areas and heating plant in Priboj Figure 4.2: Photos of district heating plant and potential storage locations Figure 4.3: Location of the heating plant in Priboj Figure 4.4: Location of PC “Toplana Priboj”, access road and potential storage space (yet to be decided after resolving the proprietary rights issues) Figure 4.5: Storage are of “Koran” company Figure 4.6: Distance between boiler room and “Koran” storage area Figure 4.7: Location of heating plant “Centralna” Figure 4.8: Potential locations of biomass storage and boiler room, and access roads Figure 4.9: Location of the heating plants Figure 4.10: Location of “Gradska toplana” Figure 4.11: Location of the “Školska toplana” and access road Figure 4.12: Inside look of the storage area in “Školska toplana Figure 4.13: Outside look of the storage area in “Školska toplana” Figure 4.14: Location of heating plants Figure 4.15: Location of sawmill in Sastavci, owned by PC Srbijašume Figure 4.16: Storage are of “Koran” company Figure 4.17: Distance between boiler room and “Koran” storage area Location from storage owned by “Hrast” Ltd. in Trnava to location of LBS “Centralna” Figure 4.18: Locations and distances from the heating plant Figure 4.19: Input raw material – “Wood Produkt” Ltd. Figure 4.20: Trucks with clamshell bucket loader and trailer – “Wood Produkt” Ltd. Figure 4.21: Covered and open storage – “Wood Produkt” Ltd. Figure4.22: Different kinds of raw materials used in “Holz-Tim” Figure 4.23: Wood chips and road storage of “Holz-Tim” Figure 5.1: Radius of 50 km and 80 km around Priboj municipality with hatched area under the forest inside the municipality Figure 5.2: Radius of 50 km and 80 km around Novi Pazar municipality with hatched area under the forest inside the municipality Figure 5.3: Radius of 50 km and 80 km around Bajina Bašta municipality with hatched area under the forest inside the municipality Figure 5.4: Radius of 50 km and 80 km around Nova Varoš municipality with hatched area under the forest inside the municipality Figure 5.4a: Interception of the circles with 50 km radius around all the municipalities analysed Figure 5.4b: Interception of the circles with 80 km radius around all the municipalities analysed Figure 5.5: Basic biomass supply chain Model Figure 5.6: Biomass supply chain Model Pb-1a Figure 5.7: Biomass supply chain Model Pb-1b Figure 5.8: Biomass supply chain Model Pb-2 Figure 5.9: BSC Model Pb-4 Figure 5.10: Biomass supply chain of district heating system by wood chips Model NP-1a Figure 5.11: Biomass supply chain of district heating system by wood chips Model NP-1b Figure 5.12: BSC Model NP-2 Figure 5.13: BSC Model NP-4 Figure 5.14: BSC Model BB-1 Figure 5.15: BSC Model BB-1.1 Figure 5.16: BSC Model BB-2 Figure 5.17: BSC Model BB-4 Figure 5.18: BSC Model NV-1 Figure 5.19: BSC Model NV-2 Figure 5.20: BSC Model NV-4 Figure 5.21: Locations of the municipalities analysed in this study Figure 5.22: BSC integrated Model

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1. EXECUTIVE SUMMARY

The DKTI Development of a Sustainable bioenergy market in Serbia initiative supports the development of sustainable growth in woody biomass supply chains for district heating plans in this market segment. The purpose of this study is to give an overview of in-depth analysis of woody biomass supply chains in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš. The study was conducted by means of literature review, field visits to wood biomass supply chain stakeholders (wood suppliers, wood chips producers, wood chips transporters, district heating plants, municipalities’ authorities and other relevant stakeholders) and telephone consultations with the officials met. An overview of all relevant wood biomass supply chain stakeholders in the reviewed municipalities is presented in this study. Not only stakeholders, but other important issues directly or indirectly related to this concept are also analysed (legal, social, environmental and other issues influencing the wood biomass supply chain or vice versa). After interviews done on-site, the results and opinions of relevant representatives of the stakeholders in each of these 4 municipalities are analysed and represented together with other relevant information in order to obtain relevant models of wood biomass supply chain. At the end, the most realistic and sustainable model is chosen for each of these 4 municipalities. The study also presents some other models in case that some other resolution of existing issues take place, and in order to give a reader an opportunity to make his/her own conclusions thinking about this.

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2. INTRODUCTION AND OBJECTIVE OF THE STUDY

Forests are among the most important renewable resources of the Republic of Serbia, with still unused potential. Forestry and wood industry potentially could play an important role in recovery of national economy and achievement of social stability of the country. However, the general state of the Serbian forests is unsatisfactory, while the pressure on forests is increased, as a result of difficult economic conditions and increased needs for the products and services from the forests. On the basis of obtained results, it can be concluded that Serbia is a middle-forested country [3].

Planning and continual operation of a plants using biomass requires steady and reliable supply of biomass. Reliability of supply can be influenced by biomass purchase agreements and through logistic planning. Logistic planning is necessary for overcoming challenges of storage, handling and transportation. Biomass projects require feedstock throughout the year, although non-forest biomass is grown only during limited growing seasons annually. It is particularly emphasized in heating plant operation with seasonal work from the middle of October until middle of April, while wood biomass harvesting and collecting is mostly done during April-June and October-November period. Therefore, biomass must be stored for later use. Feedstock must meet quality and certain level of moisture content (which is not being measured in the municipalities under consideration). The quality should be assessed upon delivery to ensure efficient conversion in a boiler and fair payment to the supplier. All mentioned biomass characteristics will be affected by a storage method. Feedstock must be handled and transported as it is moved along the supply chain. Handling and transportation must be done as cheaply as possible in order to limit overall costs of produced useful energy. Because of its low bulk density, biomass must be densified to reduce transportation cost. The recovery of forest biomass generally requires some form of processing – chipping or bundling – aimed at increasing the density and the homogeneity of the feedstock.

2.1 SERBIAN LAW REGARDING THE USE OF BIOMASS

Good regulatory and law environment is a basic requirement for the success of any business. It also refers to the intensive use of biomass through the development of biomass markets. Stable market is a necessary precondition of any investment. This reduces the risk of erroneous investment and it is the driving force that leads to the final success. It is equally important that there is general legislation, which should promote a whole field of biomass use for energy purposes, as well as the detailed regulations, narrowly focused on achieving the conditions for realization of by-laws, regulations, standards and procedures for the implementation of biomass projects etc.

Favourable circumstance for the development of Serbian biomass market is that all three key documents fully promote the use of biomass for energy purposes as one of the priority strategic directions of Energy Sector of Republic of Serbia. Republic of Serbia adopted Energy Act 2004 commenced with the establishment of a national energy policy and set the conditions for the implementation of energy efficiency, increasing the use of renewable energy and environmental protection in Energy Sector. In December 2014 new Energy Law is declared [10].

Law of Republic of Serbia recognizes the privileged producers of electricity and heat energy using renewable energy resources, including municipal waste, and cogeneration plants burning natural gas and thereby meets the requirements of energy efficiency.

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The Government of Republic of Serbia in late 2009 adopted three regulations systemically regulating the position of the producers of electricity from renewables. Through the adoption of a favourable price of electricity ("Feed-in tariff"). This way Serbia is creating conditions for attracting private investments in Power Sector. Privileged power producers shall enjoy priority at the organized electricity market, while entitled to subsidies, taxes, customs and other benefits in accordance with the law and have privileged producers of heat and power.

The Government of Republic of Serbia shall prescribe the conditions for obtaining the status of a privileged producer and criteria for assessing compliance with these requirements. According to current legislation the authorities of local governments define the conditions for obtaining the status of privileged thermal energy producer, as well as the criteria for meeting these conditions. Privileged producers of thermal energy used for heating and/or cooling, are entitled to incentive the purchase price and other benefits. By the law, competent authority of a local government will closer prescribe incentives for the production of thermal energy from renewable energy sources.

There are no constructed heating or cogeneration plants for production of electricity and/or heat energy using wood biomass in Serbia. There are heating plants in Sremska Mitrovica fired on sunflower seed shells and in Belgrade on pellets.

Potential investors in the construction process of Green energy production are forced to go through very complicated administrative procedures, which include obtaining a large number of licenses from various institutions. This complicates and slows down investment in this sector.

Beside the stated feed-in tariffs for electricity generation in ongoing Action plan for renewable energy sources for the period 2012-2020, there is a list of stimulating measures and it is expected to be expanded. This document presents the new proposal for reducing and simplification of procedures for obtaining required permits for constructing plants for energy generation both from biomass and other renewable energy sources, which should have a positive impact on future investments in this area.

Regarding the use of biomass in the region some additional barriers to greater use of biomass were identified: insufficient availability of experience in use of the technology or equipment for use of biomass, and the lack of a developed market for biomass. The neighbouring countries are increasing the demand for pellets, briquettes and wood chips, and almost all domestic production is exported.

2.2 PURPOSE OF THE STUDY

District heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš are planning to realize a fuel switch in some of their plants to woody biomass. The aim of the study is to analyse possible and sustainable biomass supply models for named municipalities. The models are designed taking into account plans of regional enterprises, municipalities, heating plant management and requirements of forest owners. We have selected most appropriate model for each of the analysed municipalities and roughly estimated costs. We have examined possibility of joint investment of municipalities in the necessary infrastructure and production of wood chips.

Switching district plants from heavy fuel oil or coal to woody biomass is going to have important influence on the quality of air in the cities, and will have positive influence on the environment. Other benefits that concern society are also briefly addressed later on.

The purpose of the study was to analyse, not only the main stakeholders in the woody biomass supply chains in these municipalities, but also to give a broader overview to all the issues concerning the supply chain (legal, environmental, social, economical).

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Finally, sustainable models of wood biomass supply chains for each of these 4 municipalities are presented and chosen according to sustainability and economic criteria.

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3. METHODOLOGY

In accordance with the scope of the work and objectives, adequate methodological concept is defined with the aim to get primarily relevant and reliable data on available woody biomass quantities. One of the most significant elements of the adopted methodological concept was field research which was conducted in wood chips production companies, industrial wood processing companies, forest administration offices, end-users (heating plants) and municipality authorities in Priboj, Novi Pazar, Bajina Bašta and Nova Varoš. The research is done using questionnaire method with appropriate questionnaires. By using here defined methodology, obtained results with adequate analyses and discussion are presented in the following chapters.

3.1 DESK RESEARCH

An extensive references review on woody biomass usage in Republic of Serbia, as well as neighbouring countries, was made. Numerous studies, documents, scientific journals, ongoing Serbian law regulation, statistical yearbooks and standards are reviewed. The list of the most important reviewed references is provided in the references. The objective of this review is to provide an overview to the examples of current usage of wood chips for heating purposes in the region, and to analyses state of knowledge regarding the logistics of woody biomass.

3.2 INTERVIEWS

Field visits - The field visits were conducted in a form of guided interview through developed questionnaires. Different types of questionnaires were made for different biomass supply chain stakeholders. Collected data are presented in the study and filled questionnaires are provided in Annex.

During December 2014 municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš are visited. In these municipalities main wood chips producers, municipality authorities, heating plant management, local forest administration offices and potential woody biomass suppliers like sawmills are interviewed.

Telephone consultations - Some additional data from interviewed companies are gathered by the telephone consultation. Some necessary prices of equipment are provided by this way also.

3.3 ASSESSMENT OF AVAILABLE WOODY BIOMASS

Based on collected data during field visits and from the analysed literature available amounts of wood chips and woody residues are estimated for each municipality. Through analysis of three year operation data for heating plants and based on the facts gathered during interviews with the management, necessary amount of energy potential from woody biomass is calculated. Data obtained from competent forest administration offices at the municipalities, important potential woody biomass suppliers and wood chips producers are taken into consideration when calculation of the available quantities of woody biomass is made. The amounts of wood chips and wood residues from neighbouring municipalities were not taken into account while this was out of the scope of the work.

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3.4 MODELING LOGISTICS OF BIOMASS SUPPLY CHAIN

Theoretical models of wood biomass supply chain based on available literature are analysed. Models of potential biomass supply chain are developed based on the examination of technical, economical, organizational and development situation in the municipality. The investigation for cooperation between municipalities is performed in order to achieve more feasible and sustainable organization of the biomass supply chain.

The currency in Serbia is dinar (RSD). In this Study we will use EUR in calculations. Currency exchanged rate used is 1 EUR equals 122.5 dinars (RSD) on January 15, 2015.

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4. STAKEHOLDERS IN BIOMASS SUPPLY CHAIN

In analysing process of biomass supply chain some of unavoidable participants are imposed. For the purpose of this study they can be classified at several levels: a) State level of highest decision makers  Ministry of Mining and Energy  Agency for Energy  Ministry of Agriculture and Environment protection b) Operational level (regional and local)  State Forest Enterprise "Srbijašume"  Private Forest Owners Associations  Woody biomass enterprises (sawmills, wood chips producer, wood processing industry, wood biomass transporters) c) Public energy sector  Electric Power Industry of Serbia  Enterprises for District Heating  Municipalities management

Considering the fact that Serbia has a great potential for use of wood biomass, as well as in the neighbouring countries, it is necessary to take the series of urgent measures for the increase of its use. One of these measures is an organized promotion of effects of its use.

In the aim of better use of woody biomass for energy purposes, it is necessary to continually make promotional activities and to emphasize the following:

 Application of wood biomass for energy purposes does not impact the forest devastation;

 Wood biomass is ecologically acceptable energy source and its application reduces level of national energy import dependence;

 Economic effects of use of woody biomass for energy production are more acceptable than the effects of fossil fuels use;

 Application of woody biomass for heating purposes is simpler and better for the environment than fossil fuel sources.

The Serbian Government needs to promote more the use of biomass residues for energy purposes in residential and industry sectors. Market conditions can be enhanced via fuel pricing and tax incentives to encourage greater use of wood residues, wood pellets and wood chips. Using wood waste in such productive manner will benefit local communities in forested areas with jobs in wood harvesting, collecting and transporting of wood waste. Since the region is rich in forests and analysed municipalities are among the poorest in Serbia, employment of local people in wood waste utilization will bring significant economic benefits to the community. Beside the improvement of forest roads, far better utilization of wood waste requires support of the Government.

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4.1 ANALYSED MUNICIPALITIES

4.1.1 Priboj

Priboj municipality is located in southwest part of Republic of Serbia. Total area of the municipality is 553 km2.

At north it borders with municipality of Čajetina (23 km long border), at east with municipality of Nova Varoš (15.6 km long border), at southeast with municipality of Prijepolje (28 km long border), at south borders with Republic of Montenegro (Pljevlja municipality, approx. 27 km long border), at west borders with Republic of Bosnia & Herzegovina (municipalities Rudo and Čajniče, approx. 51 km). Total length of the municipality’s borders is approx. 145 km.

In Priboj municipality there are 15 local communities with 33 settlements: Priboj, Banja, Batkovići, Brezna, Bučje, Dobrilovići, Živinice, Zabrđe, Zabrnjica, Zagradina, Zaostro, Jelača, Kalafati, Kaluđerovići, Kasidoli, Kratovo, Krnjača, Kukurovići, Mažići, Miliješ, Plašće, Požegrmac, Pribojska Goleša, Pribojske Čelice, Rača, Ritošići, Sjeverin, Sočice, Strmac, Hercegovačka Goleša, Crnugovići, Crnuzi, Čitluk.

Municipality of Priboj is a mountain municipality with lowest height above sea level of 392 m, while the highest is at 1,500 m above sea level. There are several mountains around the Priboj, at southwest along the border with Bosnia & Herzegovina, Bić with 1,386m, at southeast mountain Pobijenik (1,423 m), at north Crni vrh (1,186 m), and at northeast Banjsko brdo (1,282 m).

According to 2011 Census there were 27,133 inhabitants in the municipality, while in the city of Priboj, were 14,920 inhabitants. Estimated number of inhabitants on June 30, 2013 was 26,386. Average number of household members was 2.9. Rate of population growth was negative (-5.4 per 1000 inhabitants).

According to 2011 Census there were 10,602 economically active inhabitants and 7,483 of them were employed. Average wage at 2013 was 212 EUR (no taxes included). There were 4,478 employed (1,180 employed in private sector) according to data on March 31 and September 30, 2013.

Total number of dwellings in the municipality of Priboj, according to 2011 Census data, was 12,348 with total floor space of 663,388 m2. In urban area there were 5,883 dwellings with 328,776 m2.

Total length of the roads in 2013 was 148.9 km, wherein 103.42 km with modern surfacing. There are no national roads, Class I1. Total length of national roads, Class II is 72.9 km, wherein 69.22 with modern surfacing. There were 76 km of municipality roads wherein 34.2 km with modern surfacing.

There were 238 freight vehicles, 3 working vehicles, 87 road hauling vehicles and 164 connecting vehicles registered in 2013 in the municipality.

Budget expenditures in 2013 were 6,530,988 EUR. Total investments in new basic estates in 2013 were 778,318 EUR. The structure of investments by construction character was as follows: new capacities 24,327 EUR; reconstruction, modernization and enlargement 735,453 EUR; maintenance 18,539 EUR. The

1 A national road, Class I is an international public road, connecting the major towns or important economic areas of the Republic or Provinces. A national road, Class II is a public road, connecting the areas of the Republic or Province, or a road of particular importance for the Republic or Province. A provincial (municipal) road is a public road, connecting the villages and settlements within the municipality territory, or a road of transport importance within the municipality territory.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš technical structure of the expenditures was as follows: works in civil industry 560,645 EUR; domestic equipment with mounting 197,976 EUR; imported equipment with mounting 17,837 EUR and rest 1,861 EUR.

Residential building in Priboj connected to district heating Possible storage area of company “Koran” plant

Possible storage area near district heating plant (former Non-urban use of wood in Priboj FAP factory) Figure 4.1: Photos of possible storage areas and heating plant in Priboj

4.1.2 Novi Pazar

Novi Pazar municipality is located in Raška County. Total area of the municipality is 742 km2. It is located in star valley of the rivers Jošanica, Raška, Deževska and Ljudska at 496 m above sea level.

There are 26 local communities with 99 settlements in municipality of Novi Pazar: Novi Pazar, Aluloviće, Bajevica, Banja, Bare, Batnjik, Bekova, Bele Vode, Boturovina, Brđani, Brestovo, Varevo, Vever, Vidovo, Vitkoviće, Vojkoviće, Vojniće, Vranovina, Vučiniće, Vučja Lokva, Golice, Gornja Tušimlja, Goševo, Građanoviće, Gračane, Grubetiće, Deževa, Dojinoviće, Dolac, Doljani, Dragočevo, Dramiće, Žunjeviće, Zabrđe, Zlatare, Ivanča, Izbice, Jablanica, Javor, Janča, Jova, Kašalj, Kovačevo, Kožlje, Koprivnica, Kosuriće, Kruševo, Kuzmičevo, Leča, Lopužnje, Lukare, Lukarsko Goševo, Lukocrevo, Miščiće, Mur, Muhovo, Negotinac, Odojeviće, Okose, Osaonica, Osoje, Oholje, Pavlje, Paralovo, Pasji Potok, Pilareta, Pobrđe, Požega, Požežina, Polokce, Pope, Postenje, Prćenova, Pusta Tušimlja, Pustovlah, Radaljica, Rajetiće, Rajkoviće, Rajčinoviće, Rajčinovićka Trnava, Rakovac, Rast, Sebečevo, Sitniče, Skukovo, Slatina, Smilov Laz, Srednja Tušimlja, Stradovo, Sudsko Selo, Tenkovo, Trnava, Tunovo, Hotkovo, Cokoviće, Čašić Dolac, Šavci, Šaronje i Štitare.

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According to 2011 Census there were 100,410 inhabitants in the municipality, while in the city of Novi Pazar, were 66,527 inhabitants. Estimated number of inhabitants on June 30, 2013 was 102,122. Average number of household members was 4.2. Rate of population growth was positive (8.6 per 1,000 inhabitants).

According to 2011 Census there were 31,053 economically active inhabitants and 19,605 of them were employed. Average wage at 2013 was 283 EUR (no taxes included) and there were 15,289 employed (4,750 employed in private sector) according to data on March 31 and September 30, 2013.

Total number of dwellings in the municipality of Novi Pazar, according to 2011 Census data, was 28,688 with total floor space of 2,284,565 m2. In urban area there were 17,679 dwellings with 1,442,577 m2.

Total length of the roads in 2013 was 654.02 km, wherein 148.92 km with modern surfacing. There were 61.42 km of national roads, Class I, wherein 61.42 km with modern surfacing. Total length of national roads, Class II is 10.3 km, wherein 10.3 km with modern surfacing. There were 582.3 km of municipality roads wherein 77.2 km with modern surfacing.

There were 1,277 freight vehicles, 64 working vehicles, 1,059 road hauling vehicles and 1,221 connecting vehicles registered in 2013 in the municipality.

Budget expenditures in 2013 were 56,576,212 EUR. Total investments in new basic estates in 2013 were 3,888,539 EUR. The structure of investments by construction character was as follows; new capacities 2,273,053 EUR; reconstruction, modernization and enlargement 1,155,592 EUR; maintenance 459,894 EUR. The technical structure of the expenditures was as follows: works in civil industry 1,794,392 EUR; domestic equipment with mounting 1,163,004 EUR; imported equipment with mounting 511,967 EUR and rest 419,175 EUR.

1st possible location for a future biomass boiler (an extension of City Center of Novi Pazar the existing boiler room of heating plant "Centralna")

1st possible location for wood biomass storage (at the location Approach road to 1st possible location for wood biomass storage of existing “Centralna” boiler room) (at the location of existing “Centralna” boiler room)

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Approach road to 2nd possible location for wood biomass 2nd possible location for wood biomass boiler room and wood (“Raška“ Holding) biomass storage ( “Raška“ Holding) Figure 4.2: Photos of district heating plant and potential storage locations

4.1.3 Bajina Bašta

Bajina Bašta municipality is located in Zlatibor county of Republic of Serbia, at the right side of Drina River. It is located below of mountain Tara, at 257 m above sea level. Total area of the municipality is 673 km2.

There are 30 local communities with 36 settlements: Bajina Bašta, Bačevci, Beserovina, Višesava, Gvozdac, Dobrotin, Draksin, Dub, Zaglavak, Zaovine, Zarožje, Zaugline, Zlodol, Jagoštica, Jakalj, Jelovik, Konjska Reka, Kostojevići, Lug, Lještansko, Mala Reka, Obajgora, Ovčinja, Okletac, Pepelj, Perućac, Pilica, Pridoli, Rastište, Rača, Rogačica, Sijerač, Solotuša, Strmovo, Cerje, and Crvica.

According to 2011 Census there were 26,022 inhabitants in the municipality, while in the city of Bajina Bašta, were 9,148 inhabitants. Estimated number of inhabitants on June 30, 2013 was 25,491. Average number of household members was 2.9. Rate of population growth was negative (-8.6 per 1000 inhabitants).

According to 2011 Census there were 11,834 economically active inhabitants and 10,148 of them were employed. Average wage at 2013 was 300 EUR (no taxes included) and there were 4,376 employed (1,447 employed in private sector) according to data on March 31 and September 30, 2013.

Total number of dwellings in the municipality of Bajina Bašta, according to 2011 Census data, was 13,640 with total floor space of 895,838 m2. In urban area there were 3,506 dwellings with 262,950 m2.

Total length of the roads in 2013 was 1,041.33 km, wherein 417.88 km with modern surfacing. There were 48 km of national roads, Class I, wherein 48 km with modern surfacing. Total length of national roads, Class II is 136.2 km, wherein 113.6 km with modern surfacing. There were 857.13 km of municipality roads wherein 256.28 km with modern surfacing.

There were 503 freight vehicles, 13 working vehicles, 191 road hauling vehicles and 784 connecting vehicles registered in 2013 in the municipality.

Budget expenditures in 2013 were 7,785,575 EUR. Total investments in new basic estates in 2013 were 10,561,632 EUR. The structure of investments by construction character was as follows: new capacities 10,142,335 EUR; reconstruction, modernization and enlargement 210,408 EUR; maintenance 208,889 EUR. The technical structure of the expenditures was as follows: works in civil industry 79,437 EUR; domestic equipment with mounting 1,024,098 EUR; imported equipment with mounting 9,457,632 EUR and rest 465 EUR.

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4.1.4 Nova Varoš

Nova Varoš municipality is a mountain municipality located in Zlatibor county of Republic of Serbia. The lowest height is at 436 m above sea level, and the highest one is at Zlatar (Golo Brdo 1,626 m). The city itself is located at 950-1,050 m above sea level. Total area of the municipality is 581 km2.

There are 13 local communities with 33 settlements: Nova Varoš, Akmačići, Amzići, Bistrica, Božetići, Brdo, Bukovik, Burađa, Vilovi, Vraneša, Gornja Bela Reka, Gornje Trudovo, Debelja, Donja Bela Reka, Draglica, Draževići, Drmanovići, Jasenovo, Komarani, Kućani, Ljepojevići, Miševići, Negbina, Ojkovica, Radijevići, Radoinja, Rutoši, Seništa, Tikva, Tisovica, Trudovo, Čelice and Štitkovo.

According to 2011 Census there were 16,638 inhabitants in the municipality. Estimated number of inhabitants on June 30, 2013 was 16,035. Average number of household members was 2.8. Rate of population growth was negative (-10.3 per 1000 inhabitants).

According to 2011 Census there were 7,112 economicaly active inhabitants and 4,934 of them were employed. Average wage at 2013 was 290 EUR (no taxes included) and there were 2,323 employed (1,618 employed in private sector) according to data on March 31 and September 30, 2013.

Total number of dwellings in the municipality of Bajina Bašta, according to 2011 Census data, was 8,314 with total floor space of 485,081 m2. In urban area there were 3,505 dwellings with 217,379 m2.

Total length of the roads in 2013 was 778.52 km, wherein 336.77 km with modern surfacing. There were 95 km of national roads, Class I, wherein 95 km with modern surfacing. Total length of national roads, Class II is 102.1 km, wherein 98.1 with modern surfacing. There were 581.42 km of municipality roads wherein 143.67 km with modern surfacing. There were 211 freight vehicles, 3 working vehicles, 171 road hauling vehicles and 411 connecting vehicles registered in 2013 in the municipality.

Budget expenditures in 2013 were 6,048,889 EUR. Total investments in new basic estates in 2013 were 1,628,277 EUR. The structure of investments by construction character was as follows: new capacities 901,371EUR; reconstruction, modernization and enlargement 570,914 EUR; maintenance 155,992 EUR. The technical structure of the expenditures was as follows: works in civil industry 1,056,759 EUR; domestic equipment with mounting 429,657 EUR; imported equipment with mounting 136,718 EUR and rest 5,143 EUR.

4.2 SURVEY OF DISTRICT HEATING SYSTEMS FOR ANALYSED LOCATIONS

Heating plants in Serbia are more determined today to use woody biomass in their boilers. In many of them where there is a possibility for this switch are already developed some projects and studies to support this idea. Today, Serbia does not have any heating plant based on wood chips. Heating plant in Sremska Mitrovica uses sunflower seed shells, and one of the heating plants in Belgrade uses pellets. Based on interviews made with the management of heating plants in Priboj, Novi Pazar, Bajina Bašta and Nova Varoš we got the impression that they are strongly determined for fuel switch to wood chips. They would be more convinced about this idea if they can visit the nearby heating plant and make sure how it operates in praxis. The closest location of good practice example is heating plant in Gradiška in Bosnia and Herzegovina (Republic Srpska). This facility switched the fuel in 2014. The entire project of switching from heavy fuel oil to biomass - wood chips was completed for two and a half months. The reconstruction of the heating system is performed through retaining an existing boiler parts (total capacity of 11 MWth) and by replacement the burner part of the system with the installation of two fireboxes on the wood chips, with total capacity of 2x6 MWth. The investment is conducted using private-public partnership. The entire

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš project was completed with the involvement of local technicians, mechanical engineering and construction departments and with excellent cooperation with the local community.

4.2.1 District heating system in Priboj

PC "Toplana Priboj" was founded in 2012 by the municipality of Priboj, although the beginning of district heating goes back to early 90s of XX century when begun the heating of Priboj by the boilers at FAP boiler room.

Administrative centre of “Toplana Priboj” is located in 12. Januara 5 Street, while boiler room is located at Radnička Street bb, at distance of several hundred meters from it. There are 2 hot water HFO fuelled boilers; one was manufactured in 1977 (29 MW) which is out of order and the other was manufactured in 1986 (26 MW) (Table 4.1). PC “Toplana Priboj” now has 2 employees, while the rest of the employees belong to “FAP Stan” company during the transition period.

Capacity Boilers Fuel Commissioning Producer Status (MW) 1 x26 MW HFO 1986 “Đuro Đaković” 26 Operating 1 x 29 MW HFO 1977 “Đuro Đaković” 29 Out of order Table 4.1: Heating plant PC “Toplana Priboj” main characteristics; Source: PC “Toplana Priboj”

Heating plant supplies with heat residential, public and commercial buildings. Total supplied area in 2014 was 107,178 m2, while in 2015 it will be 105,993 m2 (Table 4.2).

Residential Public buildings Commercial Total Year buildings (m2) (m2) buildings (m2) (m2) Data for 2014 84,960 13,488 8,730 107,178 Data for 2015 84,123 13,488 8,388 105,993 Table 4.2: Heating plant in Priboj - demand side

 Operational regime

Heating plant operates during the heating season only, as no heat is needed during the summer time because of no centralized warm water preparation and air conditioning.

Weather-related influences on the demand of fuel are taken into consideration by average fuel consumption for last 2 heating seasons.

Whenever the demand of biomass fuel is higher than planned (weather-related influence), higher network loads has to be generated by the fossil fired boilers.

In the same way if heat load of the network is lower than the minimum continuous capacity of the biomass boiler, then the boiler has to be switched off and the heat at such low network loads has to be generated by the fossil fired boilers.

 Requirements of woody biomass

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš possible. Hence the requirements of district heating plants regarding the amounts of woody biomass after fuel switch were assumed based on:  average fuel consumption since establishment of the PC “Toplana Priboj” (season 2012/13),  efficiency of existing and new (biomass) boiler units,  lower heating value of the fuels,  planned capacity after fuel switch,  implementation of consumption based billing utilization,  implementation of energy efficiency measures at the buildings such as insulation, new windows, etc.  reduction of network losses by replacement of the pipes. Heavy fuel oil consumption in the last 3 year period is shown in Table 4.3.

Fuel 2012/13 2013/14 2014/15 Heavy fuel oil 1,868.72 t 1,760 t 1,800 t (estimated) Table 4.3: Fuel consumption of the last 3 years in heating plant in Priboj; Source: PC “Toplana Priboj”

Boiler efficiency has been estimated (Table 4.4). There are no metering devices installed. Only reliable technical data provided by the PC “Toplana Priboj” is the fuel input. Boilers conditions have been considered.

Boiler Efficiency (%) Existing HFO boiler 85 New biomass boiler 85 Table 4.4: Heating plant in Priboj boilers’ efficiency

According to the information from PC “Toplana Priboj” fuel used in heating plant PC “Toplana Priboj” is heavy fuel oil (HFO). Lower heating values for HFO and wood chips are shown in Table 4.5.

Fuel Lower heating value (kJ/kg) HFO 40,715 Wood chips (M=30%) 12,250 Table 4.5: Lower heating value of the fuels; Source: PC “Toplana Priboj”

According to the statements of the PC “Toplana Priboj” in future is expected decreasing of heated area of up to 10% supplied area if the industry will not recover (since the most of the people in the city depends on industry).

The effects of demand side measures like the changeover from square meter based to heat consumed based billing can lower the specific heat demand (in kWh/(m²∙a)) and fuel consumption of the buildings by 20% in a year. The district heating system is small enough to have implemented this measure within a summer period.

The effect of energy efficiency measures on buildings like insulation of buildings, better windows and doors, etc. have been taken into consideration with 1% per year less specific heat demand (in kWh/(m²∙a))

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš and fuel consumption. Average heating losses in distribution network are high, about 15%. Reduction of network losses by replacement of the pipes can reduce fuel consumption by 5%.

Based on the previous assumption requirements of district heating plants regarding the amount of woody biomass after fuel switch is: 4,040 t/a of wood chips (M=30%).

In this case consumption of HFO is completely replaced by the biomass (maximum required amount of woody biomass). Available species, quantity and quality of woody biomass are described in Chapter 4.3.

 Biomass boiler location

At Fig. 4.3 is shown the location of the heating plant in Priboj.

Figure 4.3: Location of the heating plant in Priboj

PC “Toplana Priboj” is located inside of the complex of former “FAP factory”. Access road is suitable for heavy trucks, although from one side there is a limitation in height of some 3.6 m. It could be overcome either by approaching from the backside or by reconstruction (removal) of the part of the building. There are problems of unsolved proprietary rights on the land and hence at the present moment is impossible to say how big nearby storage area will be (since it is unknown which area of covered and uncovered space will become property of Municipality, i.e. part of heating plant) (Figure 4.4).

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Figure 4.4: Location of PC “Toplana Priboj”, access road and potential storage space (yet to be decided after resolving the proprietary rights issues)

Proposed location for the biomass boiler is the location of existing boiler room (in or nearby, depending on final solution of proprietary rights issue), because there is enough space for a new biomass boiler plus storage (either open or covered, depending on proprietary rights final solution) no neighbouring residential buildings, access road is suitable for heavy trucks.

 On-site biomass storage

Depending on final solution of proprietary rights issues, the space around the boiler room could be enough ranging from few days to the whole season. Even if the area finally allocated to use of the district heating plant will not be enough for several months of storage, but remain enough just for several days, there is a space available for storage at distance of 5 km. This space belongs to “Koran” company and could be rented for these purposes. Capacity of this storage area is more than 2,000 t of covered area (Table 4.6).

Storage building characteristics Storage area Storage capacity 1,500 m2 2,400 t Stored biomass - wood chips (M=30%) 275 kg/m3 Table 4.6: Storage capacity of “Koran” company

Municipality authorities believe that after resolution proprietary issues about the area around heating plant, it will finally become part of the district heating power plant and it will be enough to cover at least few weeks of its supply needs. This is important in order to satisfy boiler supply needs in case of bad weather conditions. Before this solution, it is hard to even estimate available storage area, either inside or outside.

Figure 4.5: Storage are of “Koran” company Figure 4.6: Distance between boiler room and “Koran” storage area

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Wood chips can be delivered by semitrailers directly to the location. The semitrailers have a transportation capacity of 90 stacked cubic meter or max. 22 t and they are equipped with a moving floor for unloading. They unload the wood chips on the fuel yard while a wheel loader puts the fuel to the foreseen storage place or into the storage building. Assumed frequency of transport traffic is 1 - 2 semitrailers per day.

4.2.2 District heating system in Novi Pazar

PC "Gradska toplana" in Novi Pazar consists of 3 local heating plants (“Centralna”, “Lug” and “Bor”). Because of small capacities and inaccessible roads for the trucks for biomass supply, only heating plant “Centralna” is chosen as one of the potential variants for buying new biomass fired boiler and it is explicitly stated by City and district heating plant authorities. This heating plant is located in Šabana Koče bb Street, while administrative centre of PC “Gradska toplana” is located nearby in 28. Novembra 35 Street. There are 2 hot water HFO fuelled boilers in heating plant “Centralna“. One of them was manufactured in 1972 (7 MW) which is out of order and currently is being replace by a new gas-fired boiler of the same thermal capacity. The other was manufactured in 1979 (7 MW). There are 35 employees in PC “Gradska toplana“.

Capacity Boilers Fuel Commissioning Producer Status (MW) 1 x 7 MW HFO 1972 “Minel” 7 Out of order 1 x 7 MW HFO 1979 “Minel” 7 Operating Table 4.7: Main characteristics of heating plant PC “Gradska toplana”; Source: PC “Gradska toplana”

The heating plant supplies with thermal energy residential, public and commercial buildings of Novi Pazar. Total area supplied by heat produced in DHP is 101,000 m2 (Table 4.8).

Residential Public buildings and commercial Total (m2) buildings (m2) buildings (m2) 67,670 33,330 101,000 Table 4.8: Heating plant PC “Gradska toplana” Novi Pazar - supplied area

 Operational regime

Heating plant operates during the heating period only, as no heat is needed in the summer time because of no centralized warm water preparation and air conditioning.

Weather-related influences on the demand of fuel are taken into consideration by average fuel consumption for last 3 heating seasons.

Whenever the demand of biomass fuel is higher than planned (weather-related influence), higher network loads has to be generated by the fossil fired boilers.

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 Requirements of woody biomass

As there are no measurements regarding capacities in correlation with the time (e.g. hourly connected network capacities, hourly boiler capacities), an elaboration of accurate heating load curves was not possible. Hence, the requirements of district heating plants regarding the amounts of woody biomass after fuel switch were assumed based on:  average fuel consumption since in the last 3 heating seasons  efficiency of existing and new (biomass) boiler units,  lower heating value of the fuels,  planned capacity after fuel switch,  implementation of consumption based billing utilization,  implementation of energy efficiency measures at the buildings such as insulation, new windows, etc.,  reduction of network losses by replacement of the pipes.

Seasonal heavy fuel oil consumption in previous 2 years is shown in Table 4.9.

Fuel 2011/12 2012/13 2013/14 HFO 1,435.71 919.15 t 1,003.351 t Table 4.9: Fuel consumption of last 3 years in “Centralna” heating plant Novi Pazar; Source: PC “Novi Pazar”

Boiler efficiency has been estimated (Table 4.10). There are no metering devices installed. Only reliable technical data provided by the PC “Gradska toplana” is the fuel input. Boilers conditions have been considered.

Boiler Efficiency (%) existing HFO boiler 85 new biomass boiler 85 Table 4.10: Heating plant “Centralna” Novi Pazar boilers’ efficiency

According to the information from PC “Novi Pazar”, fuel used in heating plant “Centralna” is heavy fuel oil (HFO). Lower heating values for HFO and wood chips are shown in Table 4.11.

Fuel Lower heating value (kJ/kg) HFO 40,900 Wood Chips (M=30%) 12,250 Table 4.11: Lower heating value of used fuels; Source: PC “Gradska toplana”

According to the statements of PC “Gradska toplana” manager, in future is expected increasing of heated area of up to 50% supplied area (it is hard to estimate, since it is unknown rate of buildings of new buildings, and currently there are already 3-4 buildings waiting to be connected).

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20% in a year. The district heating system is small enough to have implemented this measure within a summer period.

Average heating losses in distribution network are high, about 15%. Reduction of network losses by replacement of the pipes can lower fuel consumption by 5%.

Based on the previous assumption requirements of district heating plants regarding the amount of woody biomass after fuel switch is: 4,575 t/a of wood chips (M=30%).

In this case HFO is completely replaced by biomass. This is maximum required amount of woody biomass. Available species, quantity and quality of woody biomass are described in Chapter 4.3.

 Biomass boiler location

At Fig. 4.7 is shown location of heating plant “Centralna”.

Figure 4.7: Location of heating plant “Centralna”

Heating plant “Centralna” is located inside the city centre and it is surrounded by the residential buildings. Access road is not suitable for heavy trucks, because of narrow access streets and the traffic is heavy. The idea of municipality administration and the management of PC “Gradska toplana” is to consider another option of location of a new biomass boiler room at location Dimitrija Tucovića bb Street (Holding in restructuring process “Raška”). This location is at distance of 2.3 – 2.4 km from the existing heating plant “Centralna” (Fig. 4.8). This company is with minor investments in road infrastructure directly accessible.

At Fig. 84 are shown heating plant “Centralna”, 1 of the possibilities to be chosen as a location for new biomass boiler, 1 of the possibilities to be chosen as a biomass storage and access road to heating plant “Centralna” including future biomass storage location.

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Location of Holding Raška, where both new heating plant and Potential locations of biomass boiler room and biomass storage biomass storage (approx. 12,000 m2) could be located

"Existing heating plant "Centralna" with 2 HFO boilers, 1 of Access road to 2nd variant of future biomass fuelled heating which is to be replaced by new gas-fired boiler plant at location of Holding “Raška”

Potential location of biomass storage at heating plant Access road to heating plant “Centralna” and potential biomass “Centralna” location storage Figure 4.8: Potential locations of biomass storage and boiler room, and access roads

At Fig. 4.8 is showing access road to another variant of future biomass heating plant and its storage (of approximately 12,000 m2). This storage area is located at the territory of former textile factory, today Holding in reconstruction “Raška” and proprietary rights have not been solved yet. The location is approachable for heavy trucks, but currently it is not connected to distributing district heating system. Estimated value of investment in connecting pipelines to the existing heating distribution network (700 m DN 200) is 560,000 €. Since growth of Novi Pazar is only possible in that direction, it is reasonably to build completely new boiler plant at this location with needed investments in the following equipment. It is believed that the stack of the former boiler plant existed at that location could be used. Also, electrical substation is in its near proximity. The other mentioned solution is to use existing space near heating plant “Centralna” which is not so big (approx. 220 m2 according to “Gradska toplana” representative) and access could be only possible by smaller trucks, but from the standpoint of initial investments it is much cheaper.

 On-site biomass logistic

In Table 4.12 is given storage capacity overview if first variant (location at heating plant “Centralna”) is chosen. In second case it depends what fraction (if positively resolved according to the expectations of Municipality authorities and management of PC “Gradska toplana”) of total estimated 12,000 m2 will be used, both as open and after build-up as covered storage space, as well.

Storage building at heating plant “Centralna” Storage area Storage capacity 220 m2 180 t Stored biomass - wood chips (M=30%) 275 kg/m3 Table 4.12: Storage capacity for heating plant “Centralna”

The authorities of the municipality and management of “Gradska toplana” prefer the second option (Holding “Raška”). The problems are: unsolved proprietary rights and finish of reconstructing process of

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Holding “Raška”, needed investments into building of brand new building (except, maybe, the existing stack), missing part (approx. 700 m) of pipelines in order to connect this area to the distributing heating network.

Wood chips can be delivered by semitrailers directly to the location. The semitrailers have a transportation capacity of 90 piled cubic meters or max. 22 t and they are equipped with a moving floor for unloading. They unload the wood chips on the fuel yard while a wheel loader puts the fuel to the foreseen storage place or into the storage building. Assumed frequency of transport traffic is 1 - 2 semitrailers per day.

4.2.3 District heating system in Bajina Bašta

Existing district heating system in Bajina Bašta consists of two separate heating plants:  “Gradska toplana”, and  “Školska toplana”.

“Školska toplana” is located in Svetosavska bb Street, cadastral parcels 1589/5 where also sports hall is located. The boiler room consists of 3 hot water coal boilers with the capacity of 3 x 1.6 MW. This plant supplies an elementary school “Sveti Sava”, kindergarten, high school, technical school, sports hall and 2 residential buildings with about 70 flats. During 2012 the heat energy supply of the residential buildings (“Zarić“ and “Solidarnost“) was transferred to “Gradska Toplana” due to the bottlenecks in the capacity of “Školska toplana”.

“Gradska toplana” is located in Rajka Tadića Street, in a yard between the residential buildings and consists of two parts. One part (2 x 1.84 MW + 1 x 1.76 MW) is located in the central substation in the basement of one of the residential buildings around the yard. These boilers are old and their operation caused vibrations and noise to the residents. For that reason, these boilers are not in operation, and they are used as a backup in emergency cases only. The second part (1 x 6 MW) was built in 2011 and it is located in a container aside the residential building with 3 boilers in the basement (Table 4.13). Another older boiler was installed in the container (1 x 5.03 MW) which was dismantled and replaced with a new boiler. The reason was that was no possibility to obtain permits to extend boiler house for 2 boilers units. Older boiler (5.03 MW) is repaired, but not installed (up to permission for the extensions). The fuel used in the heating plant is heavy fuel oil. This plant supplies mainly residential buildings with about 1,000 flats.

Capacity Heating plants Fuel Commissioning Producer Status (MW) “ŠKOLSKA TOPLANA” 3 X 1.6 MW coal 1985/1987/1989 “Toplota” 4.8 In operation “GRADSKA TOPLANA” 1 x 6 MW HFO 2011 “Mip Tim” 6 In operation Repaired not 1 x 5.03 MW HFO 2005 “Ivar” 5.03 installed 1 x 1.76 MW HFO 1974 “Đuro Đaković” 1.76 Not in operation 2 x 1.84 MW HFO 1974 “EMO” 3.68 Not in operation Table 4.13: Heating plants in Bajina Bašta main characteristics; Source: JP “BB Term”

Heating plants supply heat to residential, public and commercial buildings. Total supplied area is about 77,600 m2 (Table 4.14).

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Residential Public buildings Commercial Total Heating plants buildings (m2) (m2) buildings (m2) (m2) “ŠKOLSKA 3,770 13,293 - 17,063 TOPLANA” “GRADSKA 48,117 3,104 9,308 60,529 TOPLANA” Total (m2) 51,887 16,397 9,308 77,592 Table 4.14: Heating plants in Bajina Bašta – demand side

 Operational regime

Heating plant operates during the heating period only, as no heat is needed in the summer time because there is no centralized warm water preparation and air conditioning.

Weather-related influences on the demand of fuel is taken into consideration by average fuel consumption in last 3 heating seasons of which one was extremely cold.

Whenever if the demand of biomass fuel is higher than planned (weather-related influence), higher network loads has to be generated by the fossil fired boilers.

In same way if heat load of the network is lower than the minimum continuous capacity of the biomass boiler, then the boiler has to be switched off and the heat at such low network loads has to be generated by the fossil fired boilers. The existing HFO boilers will be kept for stand-by and the main back up fuel.

 Requirements of woody biomass

In this analysis is considered that district heating network of both heating plants “Školska toplana” and “Gradska toplana” will be switched with a new biomass-fired boiler. As there are no measurements regarding capacities in correlation with the time (e.g. hourly connected network capacities, hourly boiler capacities), an elaboration of accurate heating load curves was not possible. Hence, the requirements of district heating plants regarding to the amounts of woody biomass after fuel switch were assumed based on:  average fuel consumption of the last 3 years,  efficiency of existing and new (biomass) boiler units,  lower heating value of the fuels,  planned capacity after fuel switch,  implementation of consumption based billing utilization,  implementation of energy efficiency measures at the buildings such as insulation, new windows, etc.,  reduction of network losses by replacement of the pipes.

Fuel consumption of HFO and coal of the last 3 years is shown in Table 4.15.

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Fuel 2011/12 2012/13 2013/14 “Gradska toplana” (HFO) 1,248 t 988 t 933 t “Školska toplana” (Coal) 1,300 t 1,040 t 990 t Table 4.15: Fuel consumption of the last 3 years in heating plants Bajina Bašta; Source: JP “BB Term”

Boiler efficiency has been estimated (Table 4.16). There are no metering devices installed. Only reliable technical data provided by the JP “BB Term” is the fuel input. Boilers conditions have been considered.

Heating plant Efficiency (%) “Gradska toplana” 85 “Školska toplana” 70 New biomass boiler 85 Table 4.16: Heating plants in Bajina Bašta boilers’ efficiency

According to the information from JP “BB Term” used fuel (coal) in heating plant “Školska toplana” is brown coal “Breza” from Bosnia and Herzegovina. Lower heating value for HFO, coal and wood chips are shown in Table 4.17.

Fuel type Lower heating value (kJ/kg) HFO 41,000 Coal 19,400 Wood Chips (M=30%) 12,250 Table 4.17: Lower heating value of the fuels; Source: JP “BB Term”

According to the statements of the PC “BB Term” in future is expected connection of new 10,000 m2 of supplied area (health centre and residential buildings near courthouse and city hall). It means increase of annual heat production of the heating plants for 13%.

The effects of demand side measures like the changeover from square meter based to heat consumed based billing can lower the specific heat demand (in kWh/(m²∙a)) and fuel consumption of the buildings by 20% in a year. PC “BB Term” plan is to implement this measure for the heating season 2015/2016. The district heating system is small enough to implement this measure within a summer’s period.

Average heating losses in distribution network are high, about 15%. Reduction of network losses by replacement of the pipes can lower fuel consumption by 5%.

Based on the previous assumption requirements of district heating plants regarding the amounts of woody biomass after fuel switch is: 4,335 t/a of wood chips (M=30%), of which 1,260 t/a for the heating plant “Školska toplana” and 3,075 t/a for the heating plant “Gradska toplana”. In case that in both heating plants will be made replacement of the existing with a new biomass boiler, coal and HFO will be completely replaced by the biomass (maximum required amounts of woody biomass). It

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš involves connection of two district heating subunits by a heating pipeline (350 m DN 200) between “Školska”- and “Gradska toplana”. Estimated value of investment in connecting pipeline is 280,000 €. Installation and/or operation of new biomass boilers can be done in several stages. In the first stage only network “Školska toplana” can be connected and in later stage heating plant “Gradska toplana”. It means less investment and lower required amounts of woody biomass at the beginning of the project. Also, in the first year of operation of the biomass heating plant one part of the total heat generation can be delivered by the existing HFO fired boiler. Required amounts of woody biomass in this case are lower. Available species, quantity and quality of woody biomass are described in Chapter 4.3.

 Biomass boiler location

PC “BB Term” has analysed both existing heating plants as the potential locations of new biomass boiler.

Figure 4.9: Location of the heating plants

“Gradska toplana” is located between residential buildings, access road is not suitable for heavy trucks, there is a problem with ownership of the land, and there is no suitable storage area (Figure 4.10).

Figure 4.10: Location of “Gradska toplana”

Proposed location for the biomass boiler is the “Školska toplana”, because there is enough space for a new biomass boiler plus storage, no neighbouring residential buildings, access by road is suitable for heavy trucks, the land is owned by the municipality (Figure 4.11). Generally used fuel (coal) and planned fuel

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(wood biomass) in ”Školska toplana” is solid fuel which implies similar concept regarding the logistic and storage.

Figure 4.11: Location of the “Školska toplana” and access road

 On-site biomass logistic

“Školska toplana” has storage building connected with boiler room. There are also possibilities for outside storage in front of storage building (ventilating cover or fabric cover can be added). Capacity of storage area in immediate proximity to the boiler room is shown in Table 4.18.

Storage building Outside storage Storage area Storage capacity Storage area Storage capacity 24,85X19,65=488 m2 402 t 10x15=150 m2 124 t Stored biomass - wood chips (M=30%) 275 kg/m3 Table 4.18: Storage capacity of biomass in Bajina Bašta

The on-site biomass storage building has a capacity of 2 weeks and outside storage has a capacity of 5 days to ensure the heat production during the holydays, bad weather conditions etc.

Figure 4.12: Inside look of the storage area in “Školska toplana” Figure 4.13: Outside look of the storage area in “Školska toplana”

Wood chips can be delivered by semitrailers directly to the location. The semitrailers have a transportation capacity of 90 piled cubic meters or max. 22 tones and they are equipped with a moving floor for unloading. They unload the wood chips on the fuel yard while a wheel loader puts the fuel to the foreseen

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš storage place or into the storage building. Assumed frequency of transport traffic is 1 - 2 semitrailers per day.

4.2.4 District heating system in Nova Varoš

For the purposes of district heating in the municipality of Nova Varoš only HFO is used as a fuel. There are four heating plants in the system. The annual needs for HFO during heating season is about 1,300 tones which converted into energy is about 17.95 million kWh.

Public company “Energija Zlatar” manages the district heating. Supplied area consists of 722 households and three schools, a sports hall (1,370 m²), the hospital and the building of the municipal administration. Buildings (public, residential and commercial) connected to the district heating system, as well as buildings that are planned to be connected to district heating system generally are not thermally insulated and windows on the buildings are in poor condition.

Nova Varoš is located in a narrow river valley. Height difference between the highest and lowest consumers connected to the existing district heating system is about 100 meters above sea level. That is a reason that these four boiler rooms are situated at a greater distance (Fig. 4.14). Four heating plants in existing district heating system in Nova Varoš are (Table 4.19): 1. “Zebinovac”, 2. “Trikotaža (Sloboda), 3. “Pošta”, 4. “Branoševac”. Capacity Boiler stations Fuel Commissioning Producer Status (MW) “Zebinovac” 2 x 1.8 MW HFO 1984 MINEL 3.6 In operation “Trikotaža (Sloboda)” 2 x 1.8 MW HFO 1984 MINEL 3.6 In operation 2 x 1.8 MW HFO 1984 MINEL 3.6 Not in operation “Pošta” 1 x 2.9 MW HFO 2007 TERMOELEKTRO 2.9 In operation 2 x 1.8 MW HFO 1984 EMO - Celje 3.6 In operation “Branoševac” 2 x 0.8 MW HFO 2001 MIP Ćuprija 1.6 In operation Table 4.19: Boiler stations Nova Varoš main characteristics; Source: PC “Energija Zlatar”

Heating plants supply heat to residential, public and commercial buildings. Total supplied area is about 52,846 m2 (Table 4.20).

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Residential Public buildings Commercial Total Boiler stations buildings (m2) (m2) buildings (m2) (m2) “Zebinovac” 13,685 5,089 0 18,774 “Trikotaža” 12,895 1,401 0 14,296 “Pošta” 4,238 11,338 0 15,576 “Branoševac” 4,200 0 0 4,200 Total (m2) 35,018 17,828 0 52,846 Table 4.20: Boiler rooms in Nova Varoš - demand side

 Operational regime

Heating plant operates during the heating period only, as no heat is needed in the summer time because of no centralized warm water preparation and air conditioning.

Due to the geographical position of the city, average duration of the heating season is 195 days, with an average air temperature of 2.5 °C, which further affects the increase in fuel consumption.

Weather-related influences on the demand of fuel are taken into consideration by average fuel consumption. Also, mentioned weather conditions are already included in the design of existing boilers and heating networks.

Whenever the demand of biomass fuel is higher than planned (weather-related influence), heating load is higher. Missing quantity of heat energy would be generated using e fossil fuel fired boilers.

In the same way if heat load of the heating plant is lower than the minimum continuous capacity of the biomass boiler, then the biomass boiler has to be switched off. Than in the periods of low operational loads heat energy will be generated using fossil fuel fired boilers. The existing HFO boilers will be kept for stand- by and the main back up.

 Requirements of woody biomass

In this analysis is considered that network of heating plant “Pošta” and heating plant “Branoševac” will be switched to a new biomass-fired boiler.

As there are no measurements regarding capacities in correlation with the time (e.g. hourly connected network capacities, hourly boiler capacities), an elaboration of accurate heating load curves was not possible. Hence, the requirements of district heating plants regarding to the quantities of woody biomass after fuel switch were assumed based on:  average fuel consumption of the last 3 years,  efficiency of existing and new (biomass) boiler units,  lower heating value of the fuels,  planned capacity after fuel switch,  implementation of consumption based billing utilization,

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 implementation of energy efficiency measures at the buildings such as insulation, new windows, etc.,  reduction of network losses by replacement of the pipes.

Fuel consumption of HFO of the last 3 years is shown in Table 4.21.

Boiler stations Fuel 2011/12 2012/13 2013/14 “Pošta” HFO 245 t 246 t 244 t “Branoševac” HFO 77 t 73 t 68 t Table 4.21: Average fuel consumption in heating plants “Pošta” and “Branoševac”; Source: PC “Energija Zlatar”

Estimated efficiency of existing HFO boiler is: heating plant “Pošta” - 0.88% and heating plant “Branoševac” - 0.85%. There are no metering devices installed. Only reliable technical data provided by the heating plant are used as input data regarding the fuel consumption. The condition of the boilers has been considered. Estimated efficiency of new biomass boiler is 0.85%.

Lower heating value for HFO is 40,922 kJ/kg and for wood chips (M=30%) is 12,250 kJ/kg.

According to the statements of the PC “Energija Zlatar” assumed increase of supplied area in future is 20% for district heating network “Pošta” and for “Branoševac”. It means increase of annual heat production of heating plant “Pošta” and heating plant “Branoševac” for 20%.

The effects of demand side measures like the changeover from square meter based to heat consumed based billing can lower the specific heat demand (in kWh/(m²∙a)) and fuel consumption of the buildings by 20% yearly. PC “Energija Zlatar” plans to implement this measure for the heating season 2015/2016. The district heating system is small enough to implement this measure within a summer’s period.

Average heating losses in distribution network are high, about 15%. Reduction of network losses by replacement of the pipes can lower fuel consumption by 5%.

Based on the previous assumption requirements it is calculated needed quantity of woody biomass after fuel switch: 1,026 t/a of wood chips (MC=30%), of which 796 t/a for the heating plant “Pošta” and 230 t/a for the heating plant “Branoševac”.

In this case HFO consumed in the heating plants “Pošta” and “Branoševac” is completely replaced by biomass (maximum required amounts of woody biomass). It includes connection of two distribution network (“Pošta” and “Branoševac”) by a heating pipeline (460m DN 120 to connect heating plant “Pošta” and 100m DN 120 to connect heating plant “Branoševac”) to the new biomass-fired boiler. Estimated values of investments in connecting pipelines are 253,000 €+55,000€.

Installation and/or operation of new biomass boilers can be done in several stages. In the first stage only network “Pošta” can be connected and in later stage network “Branoševac”. It means less investment and lower required amounts of woody biomass at the beginning.

Available species, quantity and quality of woody biomass are described in Chapter 4.3.

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 Biomass boiler location

Municipality managers have considered few potential locations for the new biomass boilers: heating plant “Trikotaža”, location next to the high school and new location near heating plant “Branoševac” (Fig. 4.14).

Figure 4.14: Location of heating plants

There are unsolved property rights with issues at the locations where heating plant “Trikotaža” is located.

New biomass boiler which will supply elementary school, high school, technical school and high school sports hall is planned to be installed next to the high school. Location next to the high school is located in area where access road is not suitable for heavy trucks.

There is a suitable available Greenfield location near heating plant “Braneševac” and about 700 m east of the heating plant “Pošta”. New location for the biomass boiler is proposed because there is enough space for a new biomass boiler plus storage, there are no neighbouring residential buildings and access by road is suitable for heavy trucks (Fig. 4.14). As mentioned before the network of heating plants “Pošta” and “Braneševac” is considered to be connected to the new biomass boiler.

 On-site biomass logistic

As it was considered previously possible location for the new biomass boiler is a Greenfield with enough land to build biomass storage in immediate proximity to the boiler room. Assumed capacity of storage area is shown in Table 4.22.

Storage building Storage area Storage capacity 20X18.5=370 m2 300 t Stored biomass - wood chips (M=30%) 275 kg/m3 Table 4.22: Storage capacity – new biomass boiler Nova Varoš

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Proposed the on-site biomass storage building have a capacity for 1 month operation. It is enough to ensure necessary heat production during holydays and bad weather conditions as well as to provide higher level of supply reliability to the heating plant.

4.3 WOODY BIOMASS SUPPLY

If this plan for fuel switching in district heating sector will be realized more woody biomass need to be produced. According to available reports within the last several years, wood cutting of poplar trees has a remarkable share of the total cutting volume. Poplar is a very suitable species for energy crops, since its annual growth of wood volume is much higher than is the case for other species of trees in Serbia. Currently, Serbia does not have land set specifically for energy crops. Research shows that land which is not suitable for conventional agricultural crops would be suitable for planting poplar forests. These forests could be used as energy crops, as so-called short rotation coppice. This area in the plains regions near rivers and channels has an estimated area of about 200,000 ha. This is an opportunity for the potential increase of energy wood in Serbia and to ensure the necessary amount of woody biomass. Firewood and pulpwood along with forest residues and solid sawmill residues can be considered as wood biomass suitable raw material for wood chipping and utilization in future plans for heating plants.

4.3.1 Potential of woody biomass in Priboj municipality Representation of forests and their share in total area in municipality Priboj is among the highest in Serbia. Municipality Priboj has share of forest area of 60.7% and it is significantly above average 29.1% for Republic of Serbia (Table 4.23) [11].

Municipality Municipality area (ha) Forest area (ha) Forest share (%) Priboj 58,100 33,582 60.7 Table 4.23: Forest area in Priboj municipality

During analysis only available potential of woody biomass from the area of municipality Priboj is taken into account. It is not considered possible usage of woody biomass from neighbouring municipalities.

Based on statistical data from 2013 in Priboj municipality yearly is harvested about 37,593 m3 woody biomass (22,847 m3 broadleaved and 14,746 m3 conifers) [11]. These data are different comparing to data in Table 4.24. An explanation could be that during these several years passed since publication of data presented and used in Table 4.24, data collecting was improved and illegal logging was decreased, as well as import and other non-defined sources which in [12] were estimated at 46.1% level. Since, in this source [11], there are no classified data about wood biomass potentials by different categories, as it was the case in [12], the former data are used in the following analysis. Forest enterprise “Prijepolje“ and its local offices (Forest administration “Priboj“ in this case) also supervise harvesting and allocation of private forests at the entire area of municipality Priboj. There are a lot of small privately owned forests. The forests belonging to a church are also classified as private forests.

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Total Broadleaved Conifers Gross Net Rest Gross Net Rest Gross Net Rest (m3) (m3) (m3) (%) (m3) (m3) (m3) (%) (m3) (m3) (m3) (%) 19,734 16,830 2,904 15 10,675 9,499 1,176 12 9,059 7,331 1,728 19 Table 4.24: Planned harvesting amounts in 2009 for public forest in FA Priboj; Source: [12]

FA “Priboj” is making one year contracts for selling raw wood in every fiscal year. Based on the harvesting plan suitable quantities of wood are approved.

Participation of industrial wood, firewood as well as wood residue in planned harvesting amount for public forest in FA “Priboj” is shown in Table 4.25.

When it comes to private forest there are no accurate data on the annual production volume. The reason is a large number of illegal logging. Based on the data in the report made by expert services of PC "Srbijašume" following Table 4.26 is made.

From Table 4.25 and 4.26 we can get the total annual quantity of available woody biomass on the territory of the municipality Priboj from private and state forests managed by FA “Priboj”. Total gross amount is 35,539 m3 (Table 4.27). Share of broadleaved is dominant with 54% from the total available woody biomass, 54% is the share of broadleaved of the state forests, and 53% in the private forests.

From the planned annual net quantity for harvesting state-owned forests in the FA “Priboj”, about 8,166 m3 refers to firewood, and 8,058 m3 is for wood needs of sawmill industry.

Of the total allocated amount of private forests in the Table 4.26, about 6,649 m3 is firewood and approximately 6,299 m3 of quantity is for the needs of the sawmill industry. The exact amounts are not known because of incomplete dispatched quantities.

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Total Broadleaved Conifers Industrial Forest Industrial Forest Industrial Forest FA Firewood Other Total Firewood Total Firewood Other Total wood residues wood residues wood residues (m3) (m3) (m3) Priboj 8,058 8,166 2,155 1,355 19,734 1,441 8,166 1,068 10,675 6,617 - 1,087 1,355 9,059 Table 4.25: Participation of industrial wood, firewood as well as wood residue in planned harvesting amount for public forests in FA “Priboj”; Source [12]

Total Broadleaved Conifers Industrial Forest Industrial Forest Industrial Forest FA Firewood Other Total Firewood Total Firewood Other Total wood residues wood residues wood residues (m3) (m3) (m3) Priboj 7,037 6,649 2,119 - 15,805 739 6,649 1,007 8,395 6,299 - 1,112 - 7,410 Table 4.26: Participation of industrial wood, firewood as well as wood residue in planned harvesting amount for private forests in FA “Priboj”; Source [12]

Total Broadleaved Conifers Industrial Forest Industrial Forest Industrial Forest FA Firewood Other Total Firewood Total Firewood Other Total wood residues wood residues wood residues (m3) (m3) (m3) Priboj 15,095 14,815 4,274 1,355 35,540 2,180 14,815 2,075 19,070 12,916 0 2,199 1,355 16,470 Table 4.27: Total annual amounts of available woody biomass from private and state forests managed by FA “Priboj”

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 Type of biomass and biomass availability for the project

Firewood wood together with forest residues and solid sawmill residues can be considered as wood biomass and suitable raw material for wood chipping and utilization in future district heating plants.

Firewood is often classified into biomass as it is primarily intended for thermal energy production. However, the traditional method of using firewood is contrary to the objectives of the modern use of biomass and need to be considered separately.

In general, firewood market is developed and consumers spend almost all produced quantities in the municipality Priboj. Also, the use of firewood has a very strong social component. For a part of population in Republic of Serbia firewood represents the only available source of energy. Diverting customers of firewood to other types of energy system like district heating systems, could lead to social problems due to decrease in supply of firewood or to an increased volume of forest use, or environmental component of forest management could be disturbed.

Based on previous, only woody residues from forest and sawmill wood waste could be used in future woody biomass-fired heating plants. Based on data obtained from sawmill industry experience for calculation of woody residues in sawmill industry it is adopted its average share of 40% for conifers (10% sawdust and 30% large woody biomass), and 50% hard wood broadleaved in relation to equivalent m3 round wood processed in sawmill industry in municipality reduced for 2% spillage (Table 4.28). Sawdust will not be taken into account, based on the fact that its usage is more efficient in the production of woody pellets and briquettes.

Hard wood - broadleaved Conifers Raw material – timber (%) (%) Sawmill residue Solid sawmill residues 39.2 29.2 Saw dust 9.8 9.8 Spillage 2 2 TOTAL 100 100 Table 4.28: Balancing of wood biomass in sawmill

For sawmill production in this municipality is used about 7,000 m3 available quantities of woody biomass [12]. Since, available potential from the forests of Priboj municipality is 15,100 m3 it could be concluded that the wood which could be used like raw material for sawmills is mostly exported from this municipality. It is expected that implementation of the biomass-fired boilers in district heating system of Priboj, will also help a development of sawmill industry in the municipality. This is the reasons why in further calculations this figure will be used.

Also, it is assumed 14% broadleaved and 86% conifers in total available amounts of woody biomass for sawmill industry.

Currently, woody residues stay in the forest, due to unprofitable collection. It is claimed by the customers of PC “Srbijašume” that according their rules branches have to be separated from the chucks in the forest, before the skimming to a hard forest truck road. With good organization and finding the right model, woody residues could be used. Taking into account the above mentioned constraints related to the lack of new technology, lack of openness to the forest, underdevelopment of woody biomass market and other

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš weaknesses, we can estimate that in first phases only 50% of available quantities of wood resides could be utilized.

Table 4.29 shows estimated total and available quantities of woody biomass annually in municipality Priboj. This biomass potential could be used for production of wood chips as a fuel for the future heating plant.

Total quantities of Available quantities Source biomass of biomass m3/a Firewood 14,815 0 Forest residue 4,274 2,137 Broadleaved 855 855 Solid sawmill residue Conifers 3,772 3,772 TOTAL 23,716 6,764 Table 4.29: Total and available biomass quantity in Priboj municipality available for this project

For the needs of energy potentials of available wood biomass at the territory of municipality Priboj following starting project elements are adopted [12]:  Moisture content 30%  Broadleaved mass density (beech) (M=30%) - 798 kg/m3  Conifers mass density (spruce) (M=30%) - 541 kg/m3  Broadleaved lower heating value (beech) (M=30%) - 12,100 kJ/kg  Conifers lower heating value (spruce) (M=30%) - 12,400 kJ/kg.

Available energy potential of woody biomass in municipality Priboj is presented in the following Table 4.30.

Available quantities Available quantities Energy potential Source of biomass of biomass (m3/a) (t/a) (GJ/a) Broadleaved 299 239 2,880 Forest residue Conifers 1,838 994 12,329

Solid sawmill Broadleaved 855 682 8,256 residue Conifers 3,772 2,041 25,304 TOTAL 6,764 3,956 48,788 Table 4.30: Available energy potential of woody biomass in Priboj municipality

 Logistics

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Forest openness in FA “Priboj” was 9.9 m/ha [15]. The price to build 1 km of hard forest road is about 20,500 EUR/km. In FE “Prijepolje” they build 7km/a.

After harvesting, woody biomass is skimmed to the hard forest roads at the territory of FA “Priboj”. These roads are in good conditions and they are suitable for the trucks.

Average distance from the surrounding public forests to Priboj is around 26 km. Table 4.31 shows some distances from different parts of the forests belonging to FA “Priboj”. Locations of Bić, Lisa Stena-Gusinje, Crni Vrh Ljeskovac and Priboj-Pribojska Banja are located around the city.

Forests to the city Distance Čelinjak – Tmor – Sokolina – Priboj 30 km Javorje – Priboj 36 km Poblačnica I – Priboj 35-45 km Poblačnica II – Priboj 35-40 km Čagljevina – Priboj 35-42 km Čemerno Badnjevi – Priboj 50 km Gola Brda – Ponor – Priboj 50 km Ožalj – Reštevo – Priboj 35 km Kijevača – Priboj 28 km Bić – Priboj 2-10 km Lisa Stena – Gusinje – Priboj 2-10 km Crni Vrh Ljeskovac - Priboj 2-14 km Priboj – Pribojska Banja 2-10 km Table 4.31: Distances from field storages to the city

 Available prices Table 4.32 presents woody products pricelist of PC “Srbijašume“. Presented prices are expressed without VAT for 2015. Prices are given for the delivery terms on the truck road near the field and “on the stamp”.

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Price “on the stamp“ Price on field Product I category II category m3 bcm m3 bcm m3 bcm Firewood (€) (€) (€) (€) (€) (€) Hardwood logs, I class 32.4 22.3 23.6 16.3 21.6 14.9 Hardwood log, II class 24.6 17.0 16.4 11.3 14.2 9.8 Hardwood chopped logs 22.3 12.3 15.1 8.3 13.3 7.3 Hardwood forest residue - - 11.1 4.4 9.3 3.7 Softwood and conifer, I class 21.7 15.0 15.0 10.3 13.6 9.4 Softwood and conifer, II class 16.1 11.1 10.8 7.4 9.4 6.5 Softwood and conifer chopped logs 10.3 5.7 7.0 3.8 6.2 3.4 Softwood and conifer forest residue - - 23.6 16.3 21.6 14.9 Table 4.32: Pricelist of wood products in PC “Srbijašume“ for 2015; Source: PC ”Srbijašume”

4.3.2 Potential of woody biomass in Novi Pazar municipality Representation of forests and their share in total area in municipality Novi Pazar is 46.2% which is higher than the average in Republic of Serbia (29.1%) (Table 4.33) [11].

Municipality Municipality area (ha) Forest area (ha) Forest share (%) Novi Pazar 74,200 34,263 46.2 Table 4.33: Forest area in Novi Pazar municipality

During analysis only available potential of woody biomass from the area of municipality Novi Pazar is taken into account. Possible usage of woody biomass from neighbouring municipalities is not considered.

Based on statistical data from 2013 in the municipality Novi Pazar yearly is harvested about 14,500 m3 woody biomass (13,504 m3 broadleaved and 985 m3 conifers) [11]. PC “Srbijašume“, FA “Novi Pazar” also supervise harvesting after invitation and allocation of private forests at the entire area of municipality Novi Pazar.

Table 4.34 shows net amount of woody biomass, as well as wood residues. Forest residues (small branches, crown ...) are not collected. The management thinks that collection of wood residues is not profitable. These calculations are made according to an assumption of FA “Novi Pazar” that 22% of harvested wood are wood residues.

Total Conifers Broadleaved Gross Net Residues Gross Net Residues Gross Net Residues (m3) (m3) (m3) (%) (m3) (m3) (m3) (%) (m3) (m3) (m3) (%) 14,489 11,301 3,188 22 985 768 217 22 13,504 10,533 2,971 22 Table 4.34: Calculated quantities of collected wood and uncollected wood residues in FA “Novi Pazar”

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FA “Novi Pazar” makes one year contracts for selling raw wood in every fiscal year. During December all interested parties are called to submit their needs for raw wood material for the following year. Afterwards, based on the harvesting plan suitable quantities of wood are approved. Around 11,300 m3 is being sold each year from state owned forests, as well as some 20,000 m3 from private owned forests. It is estimated that share of industrial wood is 50%.

The area covered by privately owned forests is bigger than that publicly owned (23,418 versus 11,219 ha according to [14]). When it comes to private forests there are no accurate data on the annual production volume.

The reason is a large number of illegal logging. If to assume that at least 1 m³ is being harvested per 1ha, and the fact that FA “Novi Pazar” has data for only 10,000 m³ and there are is 23,418 ha of privately owned forests [14]. That is why as a total potential of private forests will be used 23,418 m³. The data given above are the assumptions of the official of FA “Novi Pazar”, who stated that private owners have very small parcels of forest and they are mostly 1.5 ha size (although there are could be found and some bigger, sized 10 and 15 ha). According to a statement of FA “Novi Pazar” manager, in Novi Pazar municipality there are only 1-1.5 ha of forests owned by the church, although there are 10-15 % of the forests which proprietary rights are being questioned.

If we assume that the percentage of wood residues when harvesting private forests is 0.5 m³/ha [14], since the area of private forests is 23,418 ha wood residue from private forests is estimated at 11,709 m3per annum. However, private forest owners significantly utilize all the wood that is available to them, including those whose quality is below the official standards. This brings us to the quantities of forest residue of 14,897 m3 in total. It is assumed that approximately same quantities are left after sawmill and other industrial processes.

Hard wood - broadleaved Conifers Raw material – timber (%) (%) Commercial goods (boards, beams) 49 59 Sawmill residue Solid sawmill residues 39.2 29.2 Saw dust 9.8 9.8 Spillage 2 2 TOTAL 100 100 Table 4.35: Balancing of wood biomass in sawmill

Also, it is assumed 93% broadleaved and 7% conifers in total available amounts of woody biomass for sawmill industry.

 Type of biomass and biomass availability for the project

Firewood wood along with forest residues and solid sawmill residues can be considered as wood biomass suitable raw material for wood chipping and utilization in future district heating plant.

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In general, firewood market is developed and consumers spend almost all produced quantities in Novi Pazar municipality. Also, the use of firewood has a very strong social component. For a part of population in Republic of Serbia firewood represents the only available source of energy. Diverting customers of firewood to other types of energy system like district heating systems, could lead to social problems due to decrease in supply of firewood or to an increased volume of forest use, or environmental component of forest management could be disturbed.

Currently, woody residues stay in the forest, due to unprofitable collection. With good organization and finding the right model, it could be used. Taking into account the above mentioned constraints related to the lack of new technology, lack of openness of the forest to the roads, underdevelopment of woody biomass market and other weaknesses, we can estimate that in the first phase only 50% of available quantities of wood resides could be utilized.

Table 4.36 shows estimated total and available quantities of woody biomass annually in Novi Pazar municipality. This biomass potential could be used for production of wood chips as a fuel for the future heating plant.

Total quantities of Available quantities Source biomass of biomass m3/a Forest residue Broadleaved 13,854 6,927 Conifers 1,043 521.5 Sawmill Broadleaved 5,431 5,431 residues Conifers 304 304 TOTAL (without firewood) 20,632 13,184 Table 4.36: Total and available biomass quantity in Novi Pazar municipality available for this project

For the needs of energy potentials of available wood biomass at the territory of Novi Pazar municipality following starting project elements are adopted [13]:  Moisture content 30%  Broadleaved mass density (beech) (M=30%) - 798 kg/m3  Conifers mass density (spruce) (M=30%) - 541 kg/m3  Broadleaved lower heating value (beech) (M=30%) - 12,100 kJ/kg  Conifers lower heating value (spruce) (M=30%) - 12,400 kJ/kg.

Available energy potential of woody biomass in Novi Pazar municipality is presented in the following table (Table 4.37).

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Available quantities Available quantities Energy potential Source of biomass of biomass (m3/a) (t/a) (GJ/a) Broadleaved 6,927 5,528 66,889 Forest residue Conifers 521.5 282 3,497

Solid sawmill Broadleaved 5,431 4,334 52,441 residue Conifers 304 164 2,034 TOTAL 13,184 10,308 124,861 Table 4.37: Available energy potential of woody biomass in Novi Pazar municipality

 Logistics

Optimal openness of the forests to the roads is very important in order to reach full potential in wood harvest. One of the main reasons for big difference between increment and harvest is low forest openness. Forest openness in FA “Novi Pazar” was only 3.6 m/ha. This is below the standard in countries with a developed forestry economy.

After harvesting, woody biomass is skimmed to the hard forest roads at the territory of FA “Novi Pazar”. These roads are in good conditions and they are suitable for the trucks.

Average distance from the surrounding public forests to Novi Pazar is around 23 km. Distance between central storage Selakovac and heating plant “Centralna” is around 4 km. Table 4.38 shows some distances from different parts of the forests belonging to FA “Novi Pazar”.

Forest storage to central storage Distance Debeljak - Medanovac – Novi Pazar 9 km Crni Vrh – Deževski – Novi Pazar 28-30 km Blizanac - Debelica – Novi Pazar 34 km Ninaja - Koznik – Novi Pazar 30 km Turjak – Vršine – Novi Pazar 16 km Vinorog – Novi Pazar 18-19 km Table 4.38: Distances from the storages to the city Novi Pazar

 Available prices Available prices of wood products in PC “Srbijašume“ for 2015 are already presented in a Table 4.32.

4.3.3 Potential of woody biomass in Bajina Bašta municipality

Share of the forests in total area in Bajina Bašta municipality is extremely high and it is one of the most forested municipalities in Serbia. Municipality Bajina Bašta has share of forest area from 44.7% and it is significantly above average 29.1% for the Republic of Serbia (Table 4.39) [11].

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Municipality Municipality area (ha) Forest area (ha) Forest share (%) Bajina Bašta 67,300 30,073 44.7 Table 4.39: Forest area in the municipality Bajina Bašta

During analysis only available potential of woody biomass from the area of Bajina Bašta municipality is taken into account. It is not considered possible usage of woody biomass from neighbouring municipalities.

Based on statistical data from 2013 in the Bajina Bašta municipality yearly is harvested about 84,000 m3 woody biomass (24,000 m3 broadleaved and 60,000 m3 conifers) [11]. In 2013 and 2014 because of more intensive wood drying, the amount of harvested wood was slightly higher. The actual amount should be 20% lower; and this would be noticeable in harvest plan for 2015. The biggest share of woods in state ownership is at the area of national park “Tara”. This park is under the direction of PC “National Park Tara”. Likewise, this company manage the state forest out of the national park Tara. They are also supervising harvesting and allocation of private forests at the entire area of municipality Bajina Bašta.

Planned harvesting amounts in 2015 for public forest in PC “National Park Tara” is 53,216 m3 gross. Harvesting plan based on wood species is presented in the following table (Table 4.40).

Harvesting plan for 2015 (m3) Fir + other Other Spruce Pine Beech Maple TOTAL conifers broadleaved 26,361 9,241 1,188 14,342 1,373 711 53,216 Table 4.40: The harvesting plan for 2015 at PC “National Park Tara” for public forests; Source: PC ”National Park Tara”

Table 4.41 shows net amount of woody biomass, as well as wood residues. Wood residues (small branches, crown ...) are not collected. The management thinks that collection of wood residue is not profitable. There have been few attempts of wood residues collection but it was in small amounts (in 2014 company sold only 150 m2 wood residues). This calculation is made based on an assumption of technical employees of PC "National Park Tara" that 20% of harvested wood is wood residue.

Total Conifers Broadleaved Gross Net Rest Gross Net Rest Gross Net Rest (m3) (m3) (m3) (%) (m3) (m3) (m3) (%) (m3) (m3) (m3) (%) 53,216 42,573 10,643 20 36,790 29,432 7,358 20 16,426 13,141 3,285 20 Table 4.41: Calculated quantities of collected wood and uncollected wood residues

PC “National Park Tara” is making one year contracts for selling raw wood in every fiscal year. During December all interested parties are called to submit their needs for raw wood material for the following year. Afterwards, based on the harvesting plan suitable quantities of wood are approved. Table 4.42 shows regular harvesting and selling plan of wood products for 2015.

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Selling plan of wood products for 2015 Pit Conifer Poles STD Conifer Broadleaved Broadleaved wood TOTAL logs conifers conifers cellulose logs firewood conifers m3+ (m3) (m3) (m3) (m3) (m3) bcm (m3) (m3) bcm bcm 14,102 370.5 3,804.5 158 2,103.5 523.5 4,028.5 5,129 6,684.50 36,904 Table 4.42: The selling plan of wood products for 2015 for PC “National Park Tara” (public forests); Source: PC ”National Park Tara”

In addition to the quantities listed in Table 4.42 for 2015 are also planned, as well as sanitation harvesting of state forests, as part of the work on the rehabilitation of the health of forests affected by the drying process. Planned net amount of random drying yield of conifers for 2015 is 10,000 m3. Of this amount, approximately 2,500 m3 was pulpwood, which is used for the production of pellets (Table 4.43).

Selling plan of wood products for 2015 – random yield – forest drying Poles Pitwood Conifer logs STD conifers Pulpwood conifers Total conifers conifers (m3) (m3) (m3) (m3) (m3) bcm m3+bcm 4,650 50 2,620 10 2,400 270 10,000 Table 4.43: The selling plan of wood products for 2015 in PC “National Park Tara” for state forest; Source: JP ”National Park Tara”

From the planned annual net quantity for harvesting state-owned forests in the PC "National Park Tara", about 10,000 m3 (5,129 m3 and 6,684.50 bcm plan for 2015) refers to firewood, and 20,000 m3 is for wood needs of sawmill industry.

Approved for harvesting (m3) Total Others Total Pine Spruce Beech Oak TOTAL conifers broadleaved broadleaved 3,495 4,857 8,352 5,367 651 570 6,588 14,940 Table 4.44: Approved for harvesting of private forest in 2013; Source: PC ”National Park Tara”, Service for private forest management

Private forests are characterized by a small forest holdings for which the usual average annual quantity of harvest is around 20-30 m3 per forest owner. Larger quantities of 200-300 m3 per harvesting are generated in illegal felling.

If we assume that the percentage of wood residues when harvesting of private forests is the same as for the state-owned forest, 20% is the overall wood residue from 2,988 m3 in private forests. However, private forest owners significantly utilize all the wood that is available to them, including those whose quality is below the official standards. For this matter, the information about forest residues should be taken as the maximum possible. On the other hand, private forest owners, for economic reasons, are often forced to use and collect wood which has low economic value and in organized production and market is not subject to sale. The amount of biomass from wood residues that remains after harvesting and that is realistically

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš possible to be collected (and redeemed) in private forests could be estimated at a maximum quantity of about 2,988 m3 per annum.

Of the total allocated amount of private forests in the Table 4.44, according to the Service for private forest management about 4,500 m3 is firewood and approximately 7,000 m3 of quantity is for the needs of the sawmill industry. The exact amounts are not known because of the incomplete dispatched quantities.

In addition to the quantities listed in Table 4.44 there is a potential in wood biomass that can be achieved through the sanitary felling of private forests, as part of the rehabilitation works on the health of forests affected by the drying process. The amount of random yield drying of private forests is around 1,000 m3. These cuts are not implemented because there is no economic justification

From tables 4.43 and 4.44 we can get the total annual quantity of available woody biomass on the territory of Bajina Bašta municipality from private and state forests managed by PC "National Park Tara" (Table 4.45). Total gross amount is 68,156 m3 (Table 4.45). Participation of conifers is dominant with 66% from the total available woody biomass, 69% is the share of conifers in the state forests, and 56% in the private forests.

Total State forest Private forest Conifers Broadleaved Total Conifers Broadleaved Total Conifers Broadleaved Total (m3) (m3) (m3) (m3) (m3) (m3) (m3) (m3) (m3) 45,142 23,014 68,156 36,790 16,426 53,216 8,352 6,588 14,940 (%) (%) (%) (%) (%) (%) (%) (%) (%) 66 34 100 69 31 100 56 44 100 Table 4.45: Total annual amounts of available woody biomass from private and state forest managed by the PC “National Park Tara” at the territory of Bajina Bašta municipality

 Type of biomass and biomass availability for the project

Firewood and celluloses wood along with forest residues and solid sawmill residues can be considered as wood biomass suitable raw material for wood chipping and utilization in future district heating plant.

In general firewood market is developed and consumers spend almost all produced quantities in Bajina Bašta municipality. Also, the use of firewood has a very strong social component. For a part of population in Republic of Serbia firewood represent only available source of energy. Diverting customers of firewood to other types of energy system like district heating systems, could lead to social problems due to decrease in supply of firewood or to an increased volume of forest use, or environmental component of forest management could be disturbed.

For those reasons firewood in the present quantities could not significantly contribute to assure additional quantities of biomass to the heating plant. However, increasing the efficiency of the use of firewood, or switching to other forms of biomass (pellets, briquettes), can relieve certain amounts of firewood and focus on its more efficient use.

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Pulpwood is mainly used as material in production of pellets and briquettes. At the territory of the municipality Bajina Bašta there are several producers of wood pellets and briquettes. All available amounts of pulpwood are sold to these facilities. Except these producers, neighbouring municipality pellet and briquette producers are also buying this wood PC “National Park Tara”.

Based on previous, only woody residues from the forests and sawmill wood waste could be used in future woody biomass fired heating plant. Based on data obtained from PC “National Park Tara”, as well as sawmill industry experience for calculation of woody residues in sawmill industry it is adopted its average share of 40% for conifers (10% sawdust and 30% large woody waste), and 50% hard broadleaves (mainly beech) in relation to equivalent m3 round wood processed in sawmill industry in municipality reduced for 2% spillage (Table 4.46). Sawdust will not be taken into account, based on the fact that its usage is more efficient in the production of woody pellets and briquettes.

Hard wood - broadleaved Conifers Raw material – timber (%) (%) Commercial goods (boards, beams) 49 59 Sawmill residue Solid sawmill residue 39.2 29.2 Saw dust 9.8 9.8 Spillage 2 2 TOTAL 100 100 Table 4.46: Woods used in sawmill industry at the Bajina Bašta municipality; Source: PC “National Park Tara”, “Wood produkt” Ltd. Bajina Bašta

Beside previous mentioned available amounts of woody biomass for sawmill industry (from state forest - 20,000 m3 and from private forest - 7,000 m3) we need to add 15,000 m3 wood imported for sawmill production in this municipality. This data is obtained from PC “National Park Tara”. Also, it is assumed - 50% hard broadleaved and 50% conifers in total available amounts of woody biomass for sawmill industry.

Currently wood residues are left in the forest, due to unprofitable collection. With good organization and finding the right model, it could be used. Taking into account the above mentioned constraints related to the lack of new technology, lack of openness of the forests, underdevelopment of woody biomass market and other weaknesses, we can estimate that during the first phase only 50% of available quantities of wood residues could be utilized. Table 4.47 shows estimated total and available quantities of woody biomass annually in municipality Bajina Bašta. This biomass potential could be used for production of wood chips as a fuel for the future heating plant.

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Total quantities of Available quantities Source biomass of biomass m3/a Firewood 14,500 0 Celluloses wood 5,070 0 Forest residue 13,631 6,815.5 Broadleaved 8,232 8,232 Solid sawmill residue Conifers 6,132 6,132 TOTAL 47,565 21,179.5 Table 4.47: Total and available biomass quantity in municipality Bajina Bašta available for this project

For the needs of energy potentials of available wood biomass at the territory of municipality Bajina Bašta the following starting project elements are adopted [13]:  Moisture content 30%  Broadleaved mass density (beech) (M=30%) - 798 kg/m3  Conifers mass density (spruce) (M=30%) - 541 kg/m3  Broadleaved lower heating value (beech) (M=30%) - 12,100 kJ/kg  Conifers lower heating value (spruce) (M=30%) - 12,400 kJ/kg.

Available energy potential of woody biomass in Bajina Bašta municipality is presented in the following table (Table 4.48). We have assumed conifers share of 50% and share of broadleaved 50% in totally available forest woody residue.

Available quantities Available quantities Energy potential Source of biomass of biomass (m3/a) (t/a) (GJ/a) Broadleaved 3,407.75 2,719.4 32,904.74 Forest residue Conifers 3,407.75 1,843.6 22,860.64

Solid sawmill Broadleaved 8,232 6,569.1 79,486.11 residue Conifers 6,132 3,317.4 41,135.76 TOTAL 21,179.5 14,449.5 176,387.3 Table 4.48: Available energy potential of woody biomass in municipality Bajina Bašta

 Logistics

In PC “National Park Tara“ harvesting is being conducted throughout the year, depending on the weather conditions). Most intense harvesting is during March, April, October and November, during winter months (December, January and February) the activity is reduced and also depends on the weather conditions, and in summer months during June, July and August is lower because of seasonal works. For conducting activities for harvesting and extraction of woody biomass company uses 20% of own resources, and 80% is outsourced. Table 4.49 presents planned annual forest harvesting by quarters during a year.

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 15% 30% 25% 30% Table 4.49: Share of annual planed harvest of state forests at PC “National Park Tara” expressed in quarters during one year

After harvesting, woody biomass is skimmed to hard forest roads at the territory of national park “Tara”. These roads are in a very good conditions and suitable for trucks. Firewood is mostly sold on the field, while industrial wood is transported to the central storage in PC “National Park Tara" at the address 84 Milenka Topalovića Street in Bajina Bašta. Central storage has capacity of 10,000 m3. Asphalt road leads to the central storage.

Average distance from on field storage to the central storage in Bajina Bašta is around 25 - 30km. Table 4.50 shows some distances from the storages. For transport purposes PC “National Park Tara“ has 6 trucks.

Field storage to central storage Distance Kaluđerske Bare – Bajina Bašta 16 km Mitrovac – Bajina Bašta 25 km Zaovine – Bajina Bašta 42 km MZ Rača – Bajina Bašta 10 km Crni Vrh – Bajina Bašta 26 km Table 4.50: Distances from field storages to the central storage in Bajina Bašta

 Prices

Table 4.51 presents woody products pricelist of PC “National Park Tara“. Presented prices are expressed without VAT for 2015. Prices are given for the delivery terms on the truck road near the field and for the delivery terms of central storage Bajina Bašta.

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Price on field Price on storage Product Class Unit (EUR) (EUR) Firewood beech– log I m3 30.3 38.5 Firewood beech – log II m3 25.1 33.3 Firewood beech –waste m3 8.4 16.6 Firewood beech I bcm 21.6 28.5 Firewood beech II bcm 17.3 24.2 Firewood beech –waste bcm 6.5 13.4 Firewood soft broadleaved - logs I m3 18.65 26.8 Firewood soft broadleaved - logs II m3 14.5 22.7 Firewood broadleaved – logs m3 13.3 21.6 Firewood soft broadleaved I bcm 13.3 21 Firewood soft broadleaved II bcm 10.32 17.2 Firewood soft broadleaved -logs bcm 5.8 13 Firewood other broadleaved - logs I m3 29.1 37.2 Firewood other broadleaved - logs II m3 24 32.4 Firewood conifer m3 18.1 25 Firewood conifer bcm 15.6 22.4 Table 4.51: Pricelist of woody products in PC “National Park Tara“ for 2015; Source: PC ”National Park Tara”

End users of firewood (mostly beech) are citizens who buy it through the union or individually. Producer of pellets and wood chips are buyers most of the firewood and celluloses woods. Some of those buyers are not from Bajina Bašta municipality, see Table 4.52.

End users Number of end users Quantity (2014) Households (for heating 200 through the trade unions - purposes) 300 individually - “Gorštak” Ltd. Bajina Bašta 2,150 m3 + 24 bcm Companies (productions of “Star Jela” Ltd. Prijepolje 1,450 m3 + 160 bcm pellets, wood chips...) “Nanix wood” Ltd. Nova Varoš 480 m3 + 125 bcm 1 company from Zvornik 100 m3 + 30 bcm Own use (PC “National Park 200 employees (firewood) - Tara”) Table 4.52: The end users of woody biomass sold by PC “National Park Tara”, Source: PC ”National Park Tara”

Table 4.53 shows pricelist of transport service of wood products as well as other services for 2015 of PC “National Park Tara“. Prices are without VAT.

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Type of service Price Unit 1. Transporting logs and thin conifer round wood (EUR) Kaluđerske Bare – Bajina Bašta m3 3.3 Tara (Mitrovac) – Bajina Bašta m3 4 Crni Vrh i Zvezda – Bajina Bašta m3 5 MZ Rača – Bajina Bašta m3 3.3 State-owned forest – Bajina Bašta m3 4.2

2. Transport broadleaved logs Kaluđerske Bare – Bajina Bašta m3 4.1 Tara (Mitrovac) – Bajina Bašta m3 5 Crni Vrh i Zvezda – Bajina Bašta m3 5.7 MZ Rača – Bajina Bašta m3 4.1 State-owned forest – Bajina Bašta m3 5

3. Transporting of bulk cubic meter of wood bcm 4.5

4. Loading round wood m3 1.3

5. Loading bulk cubic meter of wood bcm 1.3

6. Unloading round wood m3 1.1

7. Unloading of bulk cubic meter of wood bcm 1

8. Tractor work LKT – 81 h 40 - Idling h 13.2

9. Tractor work IMT h 39.7 - Idling h 13.2

8. Bulldozer work TG - 80 h 40 - Idling h 13.22 Table 4.53: Pricelist of transport and other services of PC “National Park Tara“ for 2015; Source: PC ”National Park Tara”

4.3.4 Potential of woody biomass in Nova Varoš municipality

Representation of forests and their share in total area in municipality Nova Varoš is high. Municipality Nova Varoš has share of forest area from 36% and it is significantly above average 29.1% for the Republic of Serbia (4.54).

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Municipality Municipality area (ha) Forest area (ha) Forest share (%) Nova Varoš 58,100 20,887 36 Table 4.54: Forest area in the municipality Nova Varoš

During analysis only available potential of woody biomass from the area of FA “Nova Varoš” is taken into account. It is not considered possible usage of woody biomass from neighbouring municipalities or forest administrations.

FA “Nova Varoš” as a part of Forest Estates “Prijepolje” (under the PC “Srbijašume”) manages the state forest on the territory of municipality Nova Varoš. They are also supervising harvesting and allocation of private forests.

The planned harvesting amount in 2009 for state-owned forests in FA “Nova Varoš” is 17,982 m3 gross. Table 4.55 shows gross and net amount of woody biomass, as well as wood residues. Wood residue (small branches, crown ...) is not collected. Collection of wood residues up to now is not profitable.

Total Broadleaved Conifers Gross Net Rest Gross Net Rest Gross Net Rest (m3) (m3) (m3) (%) (m3) (m3) (m3) (%) (m3) (m3) (m3) (%) 17,982 15,921 2,061 11 2,016 1,724 292 14 15,966 14,197 1,746 11 Table 4.55: Planned harvesting amount in 2009 for public forest in FA Nova Varoš; Source: [12]

FA “Nova Varoš” is making one year contracts for selling raw wood in every fiscal year. Based on the harvesting plan suitable quantities of wood are approved.

Participation of industrial wood, firewood as well as food residue in planed harvesting amount for public forest in FA “Nova Varoš” is shown in Table 4.56.

From tables 4.56 and 4.57 we can get the total annual quantity of available woody biomass on the territory of Nova Varoš municipality from private and state forests managed by FA “Nova Varoš”. Total gross amount is 24,420 m3 (Table 4.58). Participation of conifers is dominant with 89% from the total available woody biomass, 89% is the share of conifers in the state forests, and 91% in the private forests.

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Total Broadleaved Conifers Industrial Wood Industrial Wood Industrial Wood FA Firewood Other Total Firewood Total Firewood Other Total wood residue wood residue wood residue (m3) (m3) (m3) Nova 12,727 1,452 2,118 1,686 17,982 363 1,452 202 2,016 12,364 - 1,916 1,686 15,966 Varoš Table 4.56: Participation of industrial wood, firewood as well as food residue in planed harvesting amount for public forest in FA “Nova Varoš”; Source [12]

Total Broadleaved Conifers Industrial Wood Industrial Wood Industrial Wood FA Firewood Other Total Firewood Total Firewood Other Total wood residue wood residue wood residue (m3) (m3) (m3) Nova 4,897 582 941 - 6,420 65 582 88 735 4,832 - 853 - 5,865 Varoš Table 4.57: Participation of industrial wood, firewood as well as food residue in planed harvesting amount for private forest in FA “Nova Varoš”; Source [12]

Total Broadleaved Conifers Industrial Wood Industrial Wood Industrial Wood FA Firewood Other Total Firewood Total Firewood Other Total wood residue wood residue wood residue (m3) (m3) (m3) Nova 17,624 2,034 3,059 1,686 24,420 428 2,034 290 2,751 17,196 0 2,769 1,686 21,831 Varoš Table 4.58: Total annual amounts of available woody biomass from private and state forest managed by the FA “Nova Varoš”

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš From the planned annual net quantity for harvesting state-owned forests in the FA “Nova Varoš”, about 1,452 m3 refers to firewood, and 12,727 m3 is for wood needs of sawmill industry. Of the total allocated amount of private forests in the Table 4.57, about 582 m3 is firewood and approximately 4,897 m3 of this quantity is for the needs of the sawmill industry. The exact amounts are not known because of incomplete dispatched quantities.

 Type of biomass and biomass availability for the project

Firewood wood along with forest residues and solid sawmill residues can be considered as wood biomass suitable raw material for wood chipping and utilization in future district heating plant.

In general firewood market is developed and consumers spend almost all produced quantities in Nova Varoš municipality. Also, the use of firewood has a very strong social component. For a part of population in Republic of Serbia firewood represent only available source of energy. Diverting customers of firewood to other types of energy systems like district heating systems, could lead to social problems due to decrease in supply of firewood or to an increased volume of forest use, or environmental component of forest management could be disturbed.

Based on previous, only woody residue from forest and sawmill wood waste could be used in future woody biomass fired heating plant. Based on data obtained from sawmill industry experience for calculation of woody residues in sawmill industry it is adopted its average share of 40% for conifers (10% sawdust and 30% large woody biomass), and 50% hard broadleaves in relation to equivalent m3 round wood processed in sawmill industry in municipality reduced for 2% spillage (Table 4.59). Sawdust will not be taken into account, based on the fact that its usage is more efficient in the production of woody pellets and briquettes.

Beside previous mentioned available amounts of woody biomass for sawmill industry 17,624 (from state forest and from private forest) we need to add the amount that is not defined by FA “Nova Varoš” (wood from other municipalities, imported wood from abroad, illegal harvest...) for sawmill production in this municipality. In total we assume 46,800 m3 available amounts of woody biomass for sawmill industry [12]. Also, it is assumed 10% broadleaved and 90% conifers in total available amounts of woody biomass for sawmill industry.

Currently, wood residues stay in the forest, due to unprofitable collection. With good organization and finding the right model, it could be used. Taking into account the above mentioned constraints related to

DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš the lack of new technology, lack of openness of the forests, underdevelopment of woody biomass market and other weaknesses, we can estimate that during the first phase only 50% of available quantities of wood residues could be utilized.

Table 4.60 shows estimated total and available quantities of woody biomass annually in municipality Nova Varoš. This biomass potential could be used for production of wood chips as a fuel for the future heating plant.

Total quantities of Available quantities Source biomass of biomass m3/a Firewood 2,034 0 Forest residue 3,059 1,529.5 Broadleaved 1,835 1,835 Solid sawmill residue Conifers 12,300 12,300 TOTAL 19,228 15,664.5 Table 4.60: Total and available biomass quantity in municipality Nova Varoš available for this project

For the needs of energy potentials of available wood biomass at the territory of Nova Varoš municipality the following starting project elements are adopted [12]:  Moisture content 30%  Broadleaved mass density (beech) (M=30%) - 798 kg/m3  Conifers mass density (spruce) (M=30%) - 541 kg/m3  Broadleaved lower heating value (beech) (M=30%) - 12,100 kJ/kg  Conifers lower heating value (spruce) (M=30%) - 12,400 kJ/kg.

Available energy potential of woody biomass in Nova Varoš municipality is presented in the following table (Table 4.61). We have assumed conifers share of 90% and share of broadleaved 10% in totally available forest woody residue.

Available quantities Available quantities Energy potential Source of biomass of biomass (m3/a) (t/a) (GJ/a) Broadleaved 153 122 1,477.3 Forest residue Conifers 1,376.5 745 9,234.1

Solid sawmill Broadleaved 1,835 1,464 17,718.4 residue Conifers 12,300 6,654 82,513.3 TOTAL 15,664.5 8,985 110,943.2 Table 4.61: Available energy potential of woody biomass in Nova Varoš municipality

 Logistics

Optimal openness of the forests to the roads is very important in order to reach full potential in wood harvest. One of main reason for big different between increment and harvest is low forest openness. Forest

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš openness in FA “Nova Varoš” is 10.46 m/ha and it is significantly above average 7.23 m/ha for the Republic of Serbia (Table 4.62). The openness of hard forest roads in FA Nova Varoš amounts to 6.22 m/ha comparing to the 5.24 m/ha for the Republic of Serbia. This is below the standard in countries with a developed forestry economy [28].

Openness of forest by roads Forest openness Public road through the Forest road Total road Openn Work units forest Area ess modern hard soft hard soft modern hard soft total km km km km km km km km km ha m/ha “Zlatar” I 7.0 / / 33.5 20.5 7.0 33.5 20.5 61.0 4,034.44 15.12 “Crni Vrh – Gola 12.7 7.9 / 6.9 8.0 12.7 14.8 8.0 35.5 2,973.82 11.94 Brda” “Vučja- / / / 2.1 15.2 / 2.1 15.2 17.3 2,598.15 6.66 Kozomor-Vran” “Bosanje” / 6.0 / 9.0 6.0 / 15.0 6.0 21.0 1,328.34 15.81 “Jasenovo – 9.7 / / / 11.7 9.7 / 11.7 21.4 3,912.25 5.47 Božetići” “Plandište” 1.6 / / 2.6 6.1 1.6 2.6 6.1 10.3 1,068.20 9.64 TOTAL 31.0 13.9 / 54.1 67.5 31.0 68.0 67.5 166.5 15,915.2 10.46 Table 4.62: Forest openness in FA “Nova Varoš”

After harvesting, woody biomass is skimmed to hard forest roads at the territory of FA Nova Varoš. These roads are in a good conditions and suitable for trucks.

Average distance from on field storage to the Nova Varoš is around 20 - 25km. Table 4.63 shows some distances from the storages.

Field storage to Nova Varoš Distance Ljepojevići – Nova Varoš 24.5 km Štitkovo – Nova Varoš 40.5 km Božetići – Nova Varoš 12 km Drmanovići – Nova Varoš 10 km Drenova – Nova Varoš 21 km Table 4.63: Distances from field storages to the Nova Varoš

 Prices Available prices of wood products in PC “Srbijašume“ for 2015 are already presented in a Table 4.32.

End users of firewood are mostly citizens who buy it through the union or individually. Also, producers of pellets are buyers of smaller quantity of the firewood. Sawmills are buyers of industrial round wood. Some of buyers are not from Nova Varoš municipality, see Table 4.64.

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End users of wood Share of end users Households (for heating 38.3 % purposes) Companies (sawmill, productions 58.6 % (56,6% sawmill) of pellets, wood chips...) Other (buyer from other 3.1 % municipality...) Table 4.64: End users of woody biomass sold by PC “National Park Tara”, Source: PC ”National Park Tara”

4.4 WOOD CHIPS PRODUCERS

Wood chips at the moment are not used for district heating systems in Serbia. Firewood, briquettes, wood chips and pellets are wood biomass products in Priboj, Novi Pazar, Bajina Bašta and Nova Varoš. Most important demand drivers are “SPIK Iverica”, Ivanjica chipboard factory, which also produces pellets, “Star Jela”, Prijepolje wood chipping and pellet factory and other pellet factories such as “Nanixwood”, “Gotta Pellets” from Bajina Bašta and “Bitherm” from Lučani. Firewood production is also developed, and firewood from the region is distributed locally and to larger cities in Central Serbia and Vojvodina.

Classification of wood chips in the appropriate class quality is carried out according to the following parameters: moisture content, size and particle size distribution (scale size). Different countries have different criteria for the classification of wood chips into individual classes. Following Table 4.65 presents the system classification according to EN 14961 standard, which defines the size pieces of wood chips, the percentage prevalence of small, medium and large pieces in a total amount, humidity and maximum ash content.

Relevant standard for wood chips is EN 14961-4, Fuel specifications and classes - Part 4: Wood chips for non-industrial use. This European standard determines the fuel quality classes and specifications for non- industrial wood chips. This European standard covers only wood chip produced from the following raw materials (see EN 14961-1:2010):  Forest, plantation and other virgin wood;  By-products and residues from wood processing industry;  Used wood.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš DIMENSIONS IN mm Large parts < 1% Main parts >80% mass Small parts < 5 % Max length of parts P16 3.15 ≤ P ≤ 16mm < 1mm > 45 mm, and < 85 mm P45 3.15 ≤ P ≤ 45mm < 1mm > 63 mm P63 3.15 ≤ P ≤ 63mm < 1mm > 100 mm P100 3.15 ≤ P ≤ 100mm < 1mm > 200 mm Moisture share in % at the delivery M20 ≤ 20% Dried M30 ≤ 30% Suitable for storage M40 ≤ 40% M55 ≤ 55% Limited for storage M60 ≤ 65% Ash share in % of dry mass 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 4.65: Technical specification of wood chips EN 14961

4.4.1 Wood chips producers in Priboj municipality

Currently, there is no wood chip producer in Priboj municipality, but there are few other wood processing companies. Among them are sawmills owned by PC “Srbijašume“ and “Koran“ Ltd. company. Sawmill and pellet producers can be potential producers of wood chips for project purposes as they have experience in wood business.

Figure 4.15: Location of sawmill in Sastavci, owned by PC Srbijašume

 “Koran” Ltd.

Company “Koran” Ltd. is mentioned by municipality authorities and district heating plant officials as a potential part of wood chips supply chain. The company until now had not produced wood chips, but the

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš owner is interested in wood chips producing for the biomass heating plant project purpose, as well as for transport and storage.

The owner of the company has been for many years in wood business and is very experienced and willing to start with wood chips production. He is even in a negotiation process about buying a chipper and he is looking for some adequate credit option for this investment. For current business it is not necessary but company owner is interested in buying wood chip machinery in case of wood chips production start.

Company owns 5 trucks, 2 of them brand new (2014 year manufactured, 1 several years old) with capacities 10-25 t.

The company has 25 employees. The structure of them is as following:  5 (higher education)  20 (secondary education)

Logistics of input raw material and products is evaluated in Table 4.66.

Raw material Products - firewood Means of transport own vehicles (trailers with moving by own vehicles floors are needed) Distance up to 30 – 40 km Transportation cost with round wood up to 8 €/m3 from wood chips transportation less than 5- forest to sawmill 6 EUR/t Road non-categorized and hard forest truck Asphalt road roads Table 4.66: Logistics of raw material and products

At the pictures below is shown location and distance of its storage from local district heating plant. Its storage is only 5 km away from a local district heating plant and storage capacity is 2,400 t.

Figure 4.16: Storage are of “Koran” company Figure 4.17: Distance between boiler room and “Koran” storage area

4.4.2 Wood chips producers in Novi Pazar municipality

Currently there is no wood chip producer in Novi Pazar municipality, but there are several other wood processing companies. Among them are “Hrast” Ltd. and several other companies mostly dealing with

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš wood harvesting. Sawmill and pellet producers, as well as other wood logging companies can be potential producers of wood chips for project purposes as they have experience in wood business.

 “Hrast” Ltd.

Company “Hrast” Ltd. is mentioned by municipality authorities as a potential part of wood chips supply chain for district heating company in Novi Pazar. The company until now hadn’t produced wood chips, but the owner is interested in wood chips producing for the biomass heating plant project purpose, as well as for transport and storage.

The owner has been for many years in wood business and is a very experienced and willing to start with biomass chips production. He is willing to make cooperation with some other companies which he mentioned, especially ”Jelič”. Company “Jelič” is big as company “Hrast” and produces 2,000 m3 of wood yearly (firewood mostly). Company “Hrast” also wants to connect with some smaller local companies like: “Jaguar”, “Lipa” and ”Javor”.

For current business it is not necessary, but company owners are interested in buying wood chip machinery. In the case of starting wood chips production then the long-term contracts must be signed with PC “Srbijašume” and both parties are legally obliged to fulfil their obligations.

Company owns 5 trucks, 2 of them are log trucks with capacity of 7-10 t (the oldest is from 1985 and the others are newer). Also company owns 3 tractors with winches (manufactured in 1987 and 1991) and Mercedes with a winch.

The company has 2 permanent employees and they usually engage 3 more contractual workers. The structure of their education is as following:  forest technician  mechanic, lumberjack with chainsaw and certified driver of forest tractor.

Logistics of input raw material and products is evaluated in Table 4.67.

Raw material Products - firewood  forest-forest truck road-storage  from forest by the tractor with a winch, then to the storage or to a Means of transport buyer, own vehicles  from the storage by a log truck to a manufacturing company of the buyer Distance 10-25 and 10-40 km - non-categorized and hard forest truck Road Asphalt road roads Table 4.67: Logistics process of raw material and products

At the pictures below is shown location and distances of its storage to 2 variants of possible wood biomass boiler in a local district heating plant.

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Location from storage owned by “Hrast” Ltd. in Trnava to Location from storage owned by “Hrast” Ltd. in Trnava to a location of LBS “Centralna” potential location of new biomass LBS at the location of Holding “Raška” at reconstructive Figure 4.18: Locations and distances from the heating plant

4.4.3 Wood chips producers in Bajina Bašta municipality

In Bajina Bašta municipality there are 57 registered companies for wood processing. Most of them are sawmills, while the number of wood pellets producers varies. There is no producer of wood chips as a final product. Sawmill and pellet producers can be potential producers of wood chips for project purposes as they have experience in wood business.

 “Wood Produkt” Ltd.

Sawmill company “Wood Produkt” is mentioned by municipality management as potential wood chips supplier. The company until now hadn’t produced wood chips, but the owners are interested in wood chips producing for the biomass heating plant project purpose.

Annual quantity of input raw material in the last 5 years is listed in Table 4.68. All input raw material arrives in the form of round wood. Planned yearly production increase is 10-20%.

2010 2011 2012 2013 2014 Industrial 800 m3 1,000 m3 1,200 m3 1,300 m3 1,500 m3 wood Firewood 1,000 m3 1,000 m3 1,000 m3 1,000 m3 1,000 m3 TOTAL 1,800 m3 2,000 m3 2,200 m3 2,300 m3 2,500 m3 Table 4.68: Quantity of input raw material – “Wood Produkt” Ltd.

The majority of input raw material is beech (90%) and the rest is softwood (10%). No attention is paid to the moisture content of input raw material.

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Figure 4.19: Input raw material – “Wood Produkt” Ltd.

The wood used for the production comes mostly from the public company National Park “Tara” and their share is 70% and 30% from private forest owners. Number of private forest suppliers is 20 – 30.

Most intensive delivery months regarding to the raw material are April, May, June. During winter months (December, January and February) the activity is reduced and also depends on the weather conditions, and in summer months during July and August is stopped because of the seasonal works. Table 4.69 presents share of delivery quantity of input raw material during year.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec - - 7-8% 13% 13% 13% - - 12 % 12 % 12 % 10-11% Table 4.69: Share of delivery quantity of input raw material during year – “Wood Produkt” Ltd.

“Wood Produkt” doesn’t have technical equipment such as wood chip machinery and dryer. For actual business it is not necessary but company owners are interested in buying wood chip machinery in case of wood chips production start.

Raw material and products are delivered by own trucks with clamshell bucket loader and trailer (Figure 4.20).

Figure 4.20: Trucks with clamshell bucket loader and trailer – “Wood Produkt” Ltd.

The company has 6 employees. The structure of them is as following:  5 (secondary education)  1 (primary education)

Logistics of input raw material and products is evaluated in Table 4.70.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Raw material Products - firewood Means of transport Own trucks with clamshell bucket Own trucks loader Distance 30 – 50 km 90% locally Transportation cost 10 €/m3 from forest to sawmill Included in product price Road Roads are in very good conditions and Asphalt road suitable for trucks Table 4.70: Logistics of raw material and products

“Wood Produkt” has own ventilated covered storage for product and open storage for raw material at the sawmill site (Figure 4.21).

Capacities of storages are:  Storage of raw material - 70 m3  Storage of product - 30 m3.

Figure 4.21: Covered and open storage – “Wood Produkt” Ltd.

According to the company owners opinion it will be easy to rent bigger storage for the purpose of wood chips business. On the area of municipality Bajina Bašta there are a lot of former factories which can be used as appropriate storage places.

4.4.4 Wood chips producers in Nova Varoš municipality

There is no wood chip producer currently in Nova Varoš municipality, but there are several other wood processing companies. Among them is “Nanix Wood” company. This company was contacted several times and even visited, but they did not allow taking photos, neither answered the questions by the interview.

Beside them, the closes wood chip producing company is located in Prijepolje – “Star Jela”. An authority of Nova Varoš municipality is mentioned this company as potential wood chips supplier. The company is presented in following chapter.

4.4.5 Other important woody biomass users

Some wood chips producers are situated outside of analysed municipalities (Priboj, Novi Pazar, Bajina Bašta and Nova Varoš) but in neighbouring municipalities. Given that these are significant producers of wood chips, they have been interviewed and included in the analysis.

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 “Star Jela” Ltd.

Company “Star Jela”, Prijepolje is mentioned by 2 municipalities’ (Nova Varoš and Priboj) management as potential wood chips supplier. Both municipalities have negotiated with “Star Jela” company about woody biomass heating plant project. Municipality Nova Varoš has received offer for the purchase of wood chips from company “Star Jela”.

The majority of input raw materials the company use sawmill residues (80%), log timber and cellulosic wood (beech, fir, space).

The wood used for the production comes from:  PC “Srbijašume” (Ivanjica, Novi Pazar, Raška) – 10-15%,  Private forest owners’ (including some private company, e.g. from Tutin) – 60%. Number of suppliers is 300,  PC “National Park Tara”, PC “National Park Kopaonik”,  Nearby sawmills,  Import from Montenegro,  Some manufacturers of crate.

Prices of input raw material are shown in Table 4.71.

Supplier Type of woody biomass Prices (EUR/m3) Long cellulosic wood, chucks 29.5 + VAT at forest road PC ”Srbijašume” Industrial timber for primary manufacturing 55 - 70 Forest residue 7 EUR/bulk m3 + VAT at forest road Sawmill company Sawmill residue 7 EUR/bulk m3 + VAT at sawmill Table 4.71: Prices of raw material in “Star Jela”

Annual production of wood chips in the last 3 years is listed in Table 4.72. A loose m3 is calculated with a weight 275 kg of biomass with assumed tree species distribution 50% beech and 50% conifers (the company hasn’t provided information regarding to the tree species) and 30% of water content.

Quality of wood chips strongly depend on the bark content as well as contaminants since most of wood for the production of wood chips arrives in the from sawmill residue (80%). Product type is G30 and G50.

Water content is not important in their business, mostly around 30%.

Product 2012 2013 2014 Wood chips (m3) 84,000 134,000 134,000 Wood chips (t) 23,100 36,850 36,850 Table 4.72: Wood chips production in “Star Jela”

The company plans to increase yearly production more than 100% in the next 5 years. They expect increase of 100% during the next year only. The main customer is “Kronospan SRB”. Selling price in 2014 was 10 EUR/bcm.

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Equipment name Pieces Capacity Brand new stationary chipper machinery 1 - Pellet factory 1 50,000 t/a Mobile chipper 2 500 m3/h Truck and trailer (Log transport) 10 - Truck with walking floor 6 - Tipper truck 2 - Big tractor with the trailer with walking floor 1 - Commercial transport vehicles 3 - Pick-up 1 - Sawmill factory 1 10,000 m3/a Table 4.73: “Star Jela” company technical equipment

The company has 90 employees. The structure of them is as following:  5 (university education)  80 (secondary education)  5 (primary education).

Rented land is 2.5 ha. The company possesses land and they are looking for co-investors (7ha at 9 km). Drying is only natural. The company transport sawmills chips to the buyers.

Logistics of input raw material and products is evaluated in table 4.74.

Raw material Products – wood chips Means of transport Company has organized own transportation from the forest truck - road to a final Distance Approximately 70 km Approximately 200 - 220 km Transportation cost 5.6 €/m3 2.5 – 3 EUR/m3 Road Soft and hard forest truck roads, - asphalt Table 4.74: Logistics of raw material and products in “Star Jela”

 “Holz-Tim” Ltd.

Company “Holz-Tim” Ltd. is producing wood chips. Annual quantities of input raw material are approximately 40,000 m3. 80% are wood residues from primary wood producing and the rest is firewood and pulpwood. The structure of the wood they are using is 60% fir, 20% beech and 20% softwood broadleaved. Their suppliers are mostly private owners (more than 150). They also import from Montenegro (up to 5%) and obtain 5% from PC “Srbijašume”.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš They are founded in 2012 (November) and during that year they made 15,000 bulk m3 of wood chips. During 2013 they produced 95,000 bulk m3.

Equipment name Years Capacity Chipper 3 100 bulk m3/h Moving floors ~10s 3 log trucks 10-15 85-90-95 bulk m3 Table 4.75: Equipment of “Holz-Tim”

The company has 18 employees. Their educational structure is as following:  2 high education  1 higher education  15 secondary education.

They use 4 storages with storage capacities of 12,000 bulk m3 of final chips per storage place which they pay 200 EUR/storage per month.

Type of woody Supplier Prices (EUR/bulk m3) Prices (EUR/ bulk m3) biomass PU “Srbijašume” Firewood 20+VAT - Montenegro - - 3-8 Private companies - 2.4-10.6 - Table 4.76: Evaluate prices of input raw material Number of end Name Price users beech ~20.4 EUR/ bulk m3, softwood Retail companies (commercial - 10.2 EUR/bulk m3 (8.2-10.6 enterprises) EUR/bulk m3 depends on customer and its distance) Companies for own use (production of 4-5 15.5 EUR/bulk m3 pellets, processing heat or electricity…) Other – export etc. Kronospan CONFIDENTAL DATA Table 4.77: Customers and prices in company “Holz-Tim” Starting from half of the March until beginning of December approx. 90% of total yearly quantities is being delivered. They always have enough (~14,000 bulk m3) of chips in order to keep the continuity throughout the whole year.

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Figure4.22: Different kinds of raw materials used in “Holz-Tim”

Temporary near road storage Common oak chips Figure 4.23: Wood chips and road storage of “Holz-Tim”

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5. MODELLING OF A BIOMASS SUPPLY CHAIN

The biomass supply chain presents several distinctive characteristics that diversify it from a typical fuel supply chain. One of them is the need to store the biomass in a proper way, because of its seasonal availability and the necessity for continuous operation of biomass-fired heating plants. The biomass storage is a particularly important task, both for the relevant investment costs of some storage technologies and for the biomass and energy losses and safety issues related to the selection of poor storage systems. The limited timeframe for collecting a large amount of biomass leads also to significant seasonal need of the resources, both equipment and workforce. This seasonal demand may increase the cost of obtaining these resources, while leading to their suboptimal utilization, particularly as regards storage space.

Another characteristic of the biomass supply chain is that it has to deal with low-density materials. As a result, there is increased need for transportation and handling equipment, as well as storage space. This problem is enhanced by the low heating value, which is partly due to the increased moisture of most agricultural biomass types. The low density of biomass increases further the cost of collection, handling, transport and storage. Finally, several biomass types require customized collection and handling equipment, leading to a complicated structure of the supply chain.

5.1 BACKGROUND DATA AND INFORMATION

In project development process, supply of wood chips for district heating plant should take into account availability of wood chips, necessary quantities, transport distances and price of wood chips. The price of wood chips as input fuel in heating plants depends of several factors. The most significant influence is transport distance from storage and from heating plant. In the literature the economically and environmentally justified is to transport biomass from the radius of 50 km around the site.

Nevertheless experience from Austria shows that economically feasible is to transport wood chips to the heating plant maximally to 80 km [7].

Biomass potentials for the municipalities analysed in this Study, are presented according to data from the responsible Forest Estates and Forest Administration offices for these municipalities. For the sawmills residues, because of uncontrolled and untraced activities in most of the cases it was impossible to determine the source from which it comes, hence in that case is possible that is used the wood from the area of neighbouring municipalities and FA offices, respectively.

There is a methodology taking into account area covered by geographical circles of 50 km and 80 km and this is shown for each of the analysed municipalities at following figures. Hence, there are even bigger woody biomass resources available for the introduction of woody biomass-fired boilers in the district heating systems of these municipalities, than it is calculated and presented in the previous chapters, and according to these, there will be no problem from the supply side (amount of woody biomass needed for the woody biomass-fired boilers).

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Figure 5.1: Radius of 50 km and 80 km around Priboj municipality with hatched area under the forest inside the municipality

Figure 5.2: Radius of 50 km and 80 km around Novi Pazar municipality with hatched area under the forest inside the municipality

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Figure 5.3: Radius of 50 km and 80 km around Bajina Bašta municipality with hatched area under the forest inside the municipality

Figure 5.4: Radius of 50 km and 80 km around Nova Varoš municipality with hatched area under the forest inside the municipality

At figures 5.4a and 5.4b are shown interceptions of the circles made around these 4 municipalities (more precisely; the circles are made around the locations of heating plants in these municipalities). Although in the references, 50 km distance is usually mentioned as an economically acceptable limit, in some newer

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš papers are analyzed longer distances [20, 21] and hence here are shown two limits (50 and 80 km). In [22 23] are explicitly analized distances between 20 and 80 km.

Figure 5.4a: Interception of the circles with 50 km radius around all the municipalities analysed

Figure 5.4b: Interception of the circles with 80 km radius around all the municipalities analysed

Brief overview of potentials and demand for wood biomass in Priboj, Novi Pazar, Bajina Bašta and Nova Varoš municipalities is given in following table.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Priboj Novi Pazar Bajina Bašta Nova Varoš Total wood biomass 23,716 20,632 47,565 19,228 potential (m3/a) Available quantities of wood biomass for 6,764 13,184 21,180 15,665 wood chip production (m3/a) Available quantities of wood biomass for 3,956 10,308 14,450 8,985 wood chips production (t/a) Quantities needed 4,039 4,575 4,335 1,026 for DHPs (t/a) 180 t (HP ”Centralna”, covered) Storages 402 t building 19,800 t (building Unknown, characteristic (t, m2) 124 t open “Koran” Ltd.) possible 9,900 t 300 t (building) (”Školska unknown (“FAP”) (12,000 m2 toplana”) (Holding ”Raška“) 5 ha (Selakovac, open) (41,200 t) Table 5.1 Brief overview of wood biomass supply and demand in Priboj, Novi Pazar, Bajina Bašta and Nova Varoš municipalities

In the table above are summed up data needed for biomass supply chain models for analysed municipalities. The reason for slightly smaller available than needed quantity for DHP in Priboj municipality is mostly connected with the fact that there is only few sawmills in this municipality. However, this could be easily overcame, since in the neighbouring municipality, Prijepolje, exists a supplier which even exports its wood products, and this potentially supplier owns its own sawmill.

5.2 COSTS ESTIMATION IN BIOMASS SUPPLY CHAIN

Many field sources of woody biomass are, by their nature, far away from the inhabited places where they will be used to produce heat energy. Moreover, in urban areas, biomass transport by a truck may not be physically possible due to heavy traffic and resulting community resistance.

It was found that the delivery cost of a combination of woody and agricultural biomass feed stocks is lower than that for a single type of biomass, and traffic congestions resulting from biomass supply to a large facility could be significantly reduced by increasing the density of biomass [2]. Analysing and optimizing transportation costs in biomass logistic chain is crucial, because biomass is voluminous (taking into consideration heating value in relation to the mass); in order to provide necessary amounts of wood biomass we need to get it from disseminated suppliers who are more or less distant from the heating plant and storages.

For the purpose of estimation of needed investment volume for required equipment in biomass supply chain we have made following table as an overview of prices of the equipment, infrastructure and some processes. The data presented in the Table 5.2 are used in the following chapter. The techno-economic parameters reported in Table 5.3 are obtained from an overview literature data and based on data collected through the interviews.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Based on reviewed literature, particularly [13], Table 5.2 has been made. Where it was possible domestic fuel prices were used for the calculation of the cost per bcm. Also average data regarding the fuel consumption and productivity has been used. Data presented in the following Table are roughly estimated based on available data. Based on data presented in this table cost of wood chips can be estimated. Participation of certain working phases in calculation of wood chip cost depends on the predicted steps in biomass supply chain.

Estimated Needed Productivity Hourly cost Working phase Equipment cost (€) cost equipment (bcm/h) (€/h) (€/bcm) Felling Chainsaws 500-900 35 18-20 0.5

Skidder Full tree skidding capacity up 120,000-150,000 16-40 55-65 2.14 to 3t 45,000-60,000 Tractor with 45-50 (2 Full tree skidding tractor; 3,000-4,200 17 5.5-5.9 the winch operators) winch Cable crane with mobile Extraction 40,000-120,000 6-12 25-40 0.8 tower yarder light Mechanized Tractor processor 45,000; processing at the mounted 24.3 35 1.4 tractor 30,000 landing site processor Forwarder Loading HARVESTING, COLLECTING AND HANDLING Hauling the logs 180,000-270,000 24-40 65-80 2.26 capacity 10- 14t

Loading logs on 110,000-150,000 Loading Truck and

the truck and truck; capacity 18- 60-75 0.6 trailer trailer 20,000-30,000 trailer 20 t

Transporting logs 110,000-150,000 Loading Truck and (90 km back and truck; capacity 18- 60-75 2

TRANSPORT trailer forth) 20,000-30,000 trailer 20 t Unloading logs Truck and - 145.8 - 0.5 from the trailer trailer Seasoning Open air - - - 0

Chipping full High power 31,000-250,000 60 150-190 2.4 trees chipper

High power

Chipping logs 31,000-250,000 100 - 1.4 chipper Chipping High power harvesting 31,000-250,000 55 - 2.6 chipper CHIPPING residues Chipper small small power 3,500-35,000 5-8 t/h 8 3.2 power Chipper medium medium 15,000-75,000 4-7 t/h 14.7 2.7 power power

Delivery of the Truck 100,000 - wood chips (90 Truck and 115,000; 85 65-70 2.4 km back and trailer Trailer

DELIVERY forth) 45,000

Table 5.2: Estimated cost of wood chips regarding the working phases

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Prices of raw material Comments and Reference Hardwood price on the field €/m3 32.4 Pricelist FE ”Srbijašume“ Hardwood price on the field €/bcm 22.3 Pricelist FE ”Srbijašume“ Hardwood forest residue on the stamp-1st €/m3 11.1 Pricelist FE ”Srbijašume“ Hardwood forest residue on the stamp-1st €/bcm 4.4 Pricelist FE ”Srbijašume“ Hardwood forest residue on the stamp-2nd €/m3 9.3 Pricelist FE ”Srbijašume“ Hardwood forest residue on the stamp-2nd €/bcm 3.7 Pricelist FE ”Srbijašume“ Softwood and conifer, I class €/m3 21.7 Pricelist FE ”Srbijašume“ Softwood and conifer, I class €/bcm 15 Pricelist FE ”Srbijašume“ Softwood and conifer forest residue €/m3 23.6 Pricelist FE ”Srbijašume“ Softwood and conifer forest residue €/bcm 16.3 Pricelist FE ”Srbijašume“ Forest residue at forest road €/bcm 7+ VAT ”Star Jela“ Prijepolje Sawmill residue at sawmill €/bcm 7+ VAT ”Star Jela“ Prijepolje Prices of processing of raw material Comments and Reference Felling €/bcm 0.5 [13] Full tree skidding €/bcm 5.9 [13] Chipping full trees €/bcm 2.4 [13] Loading round wood €/m3 1.3 Pricelist FE ”Srbijašume“ Loading round wood €/bcm 1.3 Pricelist FE ”Srbijašume“ Unloading round wood €/m3 1.1 Pricelist FE ”Srbijašume“ Unloading round wood €/bcm 1 Pricelist FE ”Srbijašume“ Prices of machinery Comments and Reference Truck (log transport) €/pc 110,000 capacity: 18-20t Trailer (log transport) €/pc 25,000 capacity: 18-20t Truck (wood chips transport) €/pc 110,000 capacity:20-22t, 85-90bcm Trailer (wood chips transport) €/pc 45,000 capacity:20-22t, 85-90bcm Chipper small power €/pc 3,500-35,000 [13] Chipper medium power €/pc 15,000-75,000 [13] Telescopic handler €/pc 68,000 supplier Tractor + woodchips bucket €/both 60,000 supplier Transport costs Comments and Reference Truck small 5t, 15m3 fix 2-4 0.2 €/m3 km [1] €/t Truck medium 25t, 35m3 fix 2 0.15 €/m3 km [1] Truck large 40t, 100m3 fix 2 0.1 €/m3 km [1] Other costs Comments and Reference District heating pipeline €/m 350-450 depending on the pipe diameter [2] District heating pipeline DN 0-65mm €/m 300-400 [1] District heating pipeline DN 80-125 mm €/m 500-600 [1]

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš District heating pipeline DN150-200 mm €/m 750-900 [1] District heating pipeline DN 250-300 mm €/m 900-1,100 [1] Open storage €/m2 20-50 3-4 m maximum height [2] Covered storage €/m2 100-150 6-8 m maximum height [2] Closed warehouse €/m2 200-300 6-8 m maximum height [2] Table 5.3: Overview of prices regarding equipment, infrastructure, raw material and processes

There are also many different sizes and types of trucks available. In the specific case we have selected and presented only some of them that we think will be mostly used in analysed cases. Presented transportation costs for biomass have a fixed distance component that is incurred regardless of the distance travelled, and includes loading-unloading costs depreciation, insurance, interests and the administrative cost of biomass transport, and a distance variable component that includes costs of fuels, repair, tire, lubrication and labour. Distance fix component depends on the type of biomass being transported and the equipment and contractual arrangements involved, which are both case specific, and vary based on the specific form of biomass to a far greater extent than distance variable component.

5.3 DESIGNING POTENTIAL BIOMASS SUPPLY CHAIN MODELS

In order to address the specific issues of biomass usage, several methods have been used in literature to model and analyse different aspects of the agricultural and forestry biomass logistics system. A number of basic models have been developed to calculate the costs and compare different handling chains and strategies. The recent development of advanced computational tools strongly contributed to the improvement of mathematical models for analysis and optimization of such complex supply and logistic systems. One of them is the IBSAL model for a detailed dynamic simulation program for harvesting, storage, pre-processing and transport of biomass. In following analysis of designed model it can be used. Because of many unknown facts regarding these for analysed municipalities we have chosen not to use any of developed software for this purpose.

Developing sustainable biomass system from an economic, environmental and social point of view requires an optimization of the structure and functioning of the supply chain/networks, adjusted to the specific conditions of municipality region and the production systems (climate and topology, feedstock, technologies, infrastructures, energy end uses, etc.). Steps such as biomass harvesting, storage, refining and transport are particularly relevant, and should be facilitated by suitable logistics of supply chains and operations management techniques [2]. Biomass transport modelling is essential to optimize biomass supply chains, plant size and locations. In this project plant sizes are already been set, as well as some ideas about the potential supply with the wood chips. However, selection of a transportation mode cannot be based on one issue only. Economic, environmental, social, and technical parameters should be integrated to select the best biomass supply system.

It is very important for feasible implementation of biomass project to make an efficient biomass transport systems and the variable component of transport cost (dependent on the biomass collection distance) is not so dominant. Moreover, biomass heating plants require large sites for biomass storage and handling. In analysed municipalities some of the heating plants are located in residential areas, and biomass storage could be a problem. It is necessary to provide on-site storage of wood chips for couple of days during holidays, and second storage not to be far from the plant in order to minimize the transport and handling costs.

Several base biomass chain supply models has been designed as basis for the defining specific model for each municipality. Depending on the conditions in each municipality based on information regarding to the

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš each participant in biomass chain supply model described in Chapter 4, different possible alternatives of base models are developed.

Figure 5.5: Basic biomass supply chain Model

5.3.1 Designed Model No. 1

Participants in biomass chain supply Model 1 according to Figure 5.5 are:  Biomass resources – private and state forest, sawmills  Supply system – company selected through the public call  Conversion process – public company for district heating

In proposed Model 1 heating plant through the public call selects supplier(s) of wood chips. Supply of wood chips would be performed at the request of a district heating based on the contracted quantity and available storage within heating plant. It can be said that heating plants procedure regarding the purchase of wood chips would be very similar with current purchase of used fossil fuel.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Obligation of wood chips supplier is to deliver wood chips to district heating plant according the contracted quality, quantity and delivery schedule. This implies to find and buy raw material, produce wood chips, dry, store and deliver to district heating plant (to cover complete supply system).

5.3.2 Designed Model No. 2

Participants in biomass chain supply Model 2 in accordance with Figure 5.5 are:  Biomass resources – private and state forest, sawmills  Supply system – newly established municipality enterprise for the wood chips or DHP company  Conversion process – public company for district heating

Designed Model 2 assumes that part of the biomass supply system is under the public company. Legally, the company in supply system can be company for district heating (with expanded business) or within new company established by the municipality.

In this way almost complete biomass supply chain is managed by the public company, from purchasing of raw material to the heat selling. The advantages of this model are: cheaper fuel (wood chips) and therefore cheaper produced heat, lower risk because of taken control on complete biomass supply chain. The disadvantages also should be mentioned and they are: primarily greater initial investments in new equipment (wood chipping machine, trucks...), organizational problem and longer period for establishing this model.

5.3.3 Designed Model No. 3

Participants in biomass chain supply Model 3 in accordance with Figure 5.5 are:  Biomass resources – private and state forest, sawmill  Supply system – PPP company  Conversion process – PPP company or public company for district heating.

Public private partnership is included in Model 3. Supply system, as well as conversion process (heating plant) is assumed to be managed by the PPP Company. Also, because of low level of payment of the sold heat and debt of company for district heating it is possible that private partner will not be interested in conversion process. In this case public company remains to manage conversion process. The advantages of this model are: no needed investment in equipment for public company (usually private partner participate with this investment), experienced private partner. As the disadvantages following should be mentioned: PPP law is not so clear in Serbia, currently there is no conducted example of good practice regarding the public-private partnerships in energy field in Serbia.

5.3.4 Designed Model No. 4

Participants in biomass chain supply Model 4 in accordance with Figure 1 are:  Biomass resources – state forest  Supply system – PC “Srbijašume” special newly established enterprise for the wood chips production  Conversion process – public company for district heating.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš PC “Srbijašume” manages state-owned forests and in Model 4 is proposed to be involved not only in biomass resources process, but also in the supply system. In order to participate in supply system, it may establish special enterprise for the wood chips producing. Wood chips can be produced from the forest residues in forest stocks (field storages near the forest road). PC “Srbijašume” enterprise can communicate directly with the DHP as wood chips end users. Wood chips will be transported directly to the heating plant storage or to the intermediate storages and consequently to the heating plant storage according to the time scheduled.

Complete biomass supply chain is managed by two public company. The advantages of this model are: possible better utilization of forest residues, strengthening competition in the wood chips market. The disadvantages are: primarily investments in new equipment for PC “Srbijašume” (wood chipping machine, trucks...), longer period for establishing of this model (public companies are very slow in adopting new ideas).

5.4 DESIGNED POTENTIAL BIOMASS SUPPLY MODELS

5.4.1 Proposed biomass supply models for heating plant in Priboj

Based on general presentation of modelling idea in previous chapter, following biomass supply chain models has been designed for the district heating plant PC “Toplana Priboj”.

The potential participants in woody biomass supply chain in Priboj in the following scenarios are: a) Biomass resources  State Forest (FE “Prijepolje”, FA “Priboj”)  Private Forest (private forest owners in Priboj municipality)  Sawmill (just couple of them both registered and unregistered in Priboj municipality) b) Supply system (wood chips suppliers)  Private company selected through the public tender (e.g. “Star Jela“ Ltd, “Koran” Ltd…)  Newly established municipality enterprise specialized for wood chips production or PC “Toplana Priboj”, Novi Pazar  PPP company  New FE “Prijepolje” specialized enterprise for the wood chips c) Conversion process  PC “Toplana Priboj”  PPP company.

For the purpose of selection of the most appropriate supply model we have designed several alternatives of the model.

 Model Pb-1

Assumptions in the first scenario are:  Biomass resources are FE “Prijepolje”, FA “Priboj”; private forests (PF) and sawmills.  Wood chip supplier (Supplier) is a private company selected through a public tender.  PC “Toplana Priboj” is end user of wood chips.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Supplier buys raw material from biomass resources, on the forest storage in case of FE “Prijepolje”, FA “Priboj” and PF and on the sawmills sites.

Wood chips are produced from the forest residues at the forest storage near the forest road by supplier’s mobile wood chipper and from sawmill residue on a sawmill site or at own site depending on the current situation (e.g. “Star Jela” company has its own open storages and they can make wood chips there, instead on the temporary forest storages).

Wood chips are transported directly to the heating plant storage or to the intermediate storages (supplier’s own or rented storage) and consequently to the heating plant storage according to the contracted time schedule, quantity and quality. Wood chips transport is ensured by the supplier’s transport.

In Figure 5.6 is shown practical example of Model Pb-1 whereas the supplier is assumed to be interviewed company “Star Jela” in order to provide exact data for distance, storage, etc. In this figure is also included missing quantity of 83t of wood biomass from sawmills in order to fully satisfy calculated yearly needs for DHP biomass supply. Even much bigger needs could be supplied from nearby Prijepolje municipality, where even a potential supplier (“Star Jela” has sawmill with capacity of 10,000 m3/a).

In this scenario PC “Toplana Priboj” needs to make a long term contract with the supplier.

Figure 5.6: Biomass supply chain Model Pb-1a

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Also needed investments to conduct this scenario with “Star Jela” (since they are representative of chipper producer and already possesses own trucks in accordance with assumed participation in this BSC model) are shown in Table 5.4. Since there is still unknown area of available storage in district heating plant, a realistic area by the opinion of the authors is chosen, and this area could be even much more bigger depending on a final solution of proprietary issues.

BSC part Company Investments Price (€) FE “Prijepolje”, FA Biomass resources No investments 0 “Priboj”, PF, sawmills Open storage* 0 Storage space “Star Jela” Covered storage* 8,750,000 Closed warehouse storage 7ha* 14,000,000 Conversion process PC ”Toplana Priboj” Tractor with woodchips bucket** 60,000

* These are different options and they should not be summed up (open storage, although currently used for raw material already exists, and here are given options for the investments in 2 other types of storages) **for wood chips manipulation at the DHP storage Table 5.4: Needed investments in Model PB-1a

The investments in case the chosen supplier is “Koran” are shown in Table 5.5. This company also possess trucks suitable for transportation of the wood chips and has its own storage building.

BSC part Company Investments Price (€) FE “Prijepolje”, FA Biomass resources No investments 0 “Priboj”, PF, sawmills Private company Chipper 4-7 t/h (medium power) 40,000 Supply system (e.g. “Koran”) Tractor with woodchips bucket 60,000 Conversion process PC ”Toplana Priboj” Tractor with woodchips bucket 60,000 *for wood chips manipulation at the DHP storage Table 5.5: Needed investments in Model Pb-1b

As mentioned in Chapter 4, in Priboj municipality there are only few wood processing companies and there are no wood chips producers, but there is a big pellet company and sawmill (10,000 m3/a) in nearby Prijepolje municipality (30 km) with its own storages (one of them is located between Priboj and Prijepolje). This company is interested in expanding business to wood chips for the project purposes. Also, in Priboj there is a company “Koran” with own storage space (2,400 t).

In case both companies (“Star Jela” and “Koran”) are chosen to supply the heating plant, the supply of wood chips will become more secure and reliable, and maybe even cheaper (Figure 5.7). Heating plant in this case can reduce a risk regarding the wood chips supply. Also, potential investments of these two companies will be lower.

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Figure 5.7: Biomass supply chain Model Pb-1b

Needed investments for PC ”Toplana Priboj” are the same as in Model Pb-1.

 Model Pb-2

Assumptions made in this model are:  Biomass resources are FE “Prijepolje”, FA “Priboj”, private forests (PF) and sawmills.  Wood chip supplier (Supplier) is a new established municipality specialized enterprise for the wood chips or PC “Toplana Priboj”.  PC “Toplana Priboj” is end user of wood chips.

Who will be supplier in this model, new established municipality specialized enterprise or PC “Toplana Priboj”, is a legal question.

Purchasing of raw material is the same as it was in Model Pb-1, biomass is bought from biomass resources, on the forest storage in case of FE “Prijepolje”, FA “Priboj” and PF and on the sawmill site.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Wood chips are produced from the forest residues in forest storages near the forest roads by supplier’s mobile wood chipper and from sawmill residues on sawmill site or intermediate storage rented by supplier depending on the possibilities (Figure 5.8).

Figure 5.8: Biomass supply chain Model Pb-2

As the supplier and end user of wood chips is the same company, transportation and storage can be optimally organized. Assumption is that supplier rent intermediate storage of “Koran”, as currently the biggest storage building in this area. If proprietary legal issues are positively solved, as expected, DHP can use its own storage without the need for intermediate storage in that case.

Wood chips transport is ensured by the supplier’s transport or rented from the transport company.

In this scenario PC “Toplana Priboj” needs to make contracts with the biomass resources producers.

Needed investments to conduct this scenario in accordance with assumed participant in biomass supply chain are shown in Table 5.6.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš BSC part Company Investments Price (€) FE “Prijepolje”, FA Biomass resources No investments 0 “Priboj”, PF, sawmill Chipper 4-7 t/h (medium power) 40,000 PC ”Toplana Priboj” or Supply system Truck and semitrailers (20-22 t) 155,000 Municipality enterprise Tractor with woodchips bucket 60,000 Conversion process PC ”Toplana Priboj” Tractor with woodchips bucket* 60,000 *This could be the same tractor as already mentioned in supply system, depending on the legal issues of the ownership. Table 5.6: Needed investments in Model Pb-2

Based on price from Table 5.2 and data from Figure 5.8 in Table 5.7 are shown calculated costs of working phase in BSC.

Working phase Cost (€/bcm) Raw material 7 Chipping 2.7 Transportation 1.3 Storage 0.5 Seasoning 0 Table 5.7: Calculated cost of working phase in BSC Model Pb-2

 Model Pb-3

Assumptions made in this model are as follows:  Biomass resources are FE “Prijepolje”, FA “Priboj”, private forest (PF) and sawmill,  Wood chip supplier (Supplier) is PPP company,  PPP company or PC “Toplana Priboj” is end user of wood chips.

Proposed Model Pb-3 means public private partnership company as a supplier and conversion system. We can compare this model with previous explained Model Pb-2, where is municipality owned company responsible for supply and conversion system as the only difference.

The implementation of activity in biomass supply chain Model Pb-3 can be the same as in Model Pb-2, as well as needed investments. Private partner within the PPP company will invest in machinery and equipment in case of Model Pb-3.

 Model Pb-4

Assumptions made in this model are as follows:  Biomass resources are FE “Prijepolje”,  Wood chip supplier (Supplier) is FE “Prijepolje”,  PC “Toplana Priboj” is end user of wood chips.

Biomass resources and supplier is the same forest company, FE “Prijepolje”. In order to participate in the wood chip supply is assumed that FE “Prijepolje” establishes specialized enterprise for the production of

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš wood chips. Quantities of biomass available to be used for wood chips, in this case will not be from the area of FA “Priboj” only, but from the whole area of FE “Prijepolje”.

Wood chips are produced from the crown parts of the trees of principal and intermediate cutting, whole trees from the thinning and wood waste occurred during the assortment production in forest stocks by supplier’s mobile wood chipper.

Wood chips are transported directly to the heating plant storage or to the intermediate storages (supplier’s rented storage) and consequently to the heating plant storage according to the contracted delivery terms, quantity and quality. Wood chips transport is ensured by the supplier’s transport. In case of positive solution of proprietary rights issues, wood chips will be transported directly to the heating plant storage, and there will be no need for additional storage space.

In Figure 5.9 is shown practical example of Model Pb-4 with data for distance, storage.

FE “Prijepolje” enterprise can communicate directly with the DHP as a wood chips end user. In this scenario PC “Toplana Priboj” needs to make one long term contracts with the supplier.

Figure 5.9: BSC Model Pb-4

Needed investments to conduct this scenario in accordance with assumed participant in BSC model are shown in Table 5.8.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš BSC part Company Investments Price (€) Biomass resources FE “Prijepolje” No investments 0 2xChipper 4-7 t/h (medium power) 80,000 Semitrailers (20-22 t) 45,000 Supply system FE “Prijepolje” Covered storage 1,000m2 100,000 Woodchips bucket 10,000 Conversion process FE ”Prijepolje” Tractor with woodchips bucket* 60,000 *for wood chips manipulation on the DHP storage. Table 5.8: Needed investments in Model Pb-4

Based on price from Table 5.2 and data from Figure 5.9 in Table 5.9 are shown calculated costs of working phase in BSC.

Working phase Cost (€/bcm) Raw material 7 Chipping 2.7 Transportation 2.1 Storage 0.5 Seasoning 0 Table 5.9: Calculated cost of working phase in BSC Model Pb-4

5.4.2 Proposed biomass supply models for heating plant in Novi Pazar Based on general presentation of modelling idea in previous chapter following biomass supply chain models has been designed.

The potential participants in woody biomass supply chain in Novi Pazar in following scenarios are: d) Biomass resources  State - owned forest (PC “Srbijašume“, FE “Šumarstvo“ Raška, FA “Novi Pazar“)  Private forest (private owners Priboj municipality)  Sawmill e) Supply system (wood chips suppliers)  Private company selected through the public tender (e.g. “Holz-Tim” Ltd. Ivanjica, “Star Jela“ Ltd. Prijepolje, “Hrast” Ltd. Novi Pazar…)  Newly established municipality enterprise specialized for wood chips production or PC “Gradska toplana”, Novi Pazar  PPP company  New FE “Šumarstvo” Raška, FA “Novi Pazar” specialized enterprise for the wood chips f) Conversion process  PC “Gradska toplana”  PPP company.

For the purpose of selection of most appropriate supply model we have designed several alternatives of model.

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Assumptions in the first scenario are:  Biomass resources are FE “Šumarstvo” Raška, FA “Novi Pazar”; private forests (PF) and sawmills.  Wood chip supplier (Supplier) is a private company selected through a public tender.  PC “Toplana Priboj” is end user of wood chips and in this case it is the location of Holding “Raška”

Supplier buys raw material from biomass resources, on the forest storage in case of FE “Šumarstvo”, FA “Novi Pazar” and PF and on the sawmills sites or at its own territory if it is from other municipality (“Holz- Tim” Ivanjica or “Star Jela” Prijepolje).

In Figure 5.10 is shown option of Model NP-1a. This model is made assuming that woody biomass-fired boiler is located at location of Holding “Raška“, where unsolved proprietary issues still exist, but because of the proximity of the regional road and electrical substation and potentially big storage area (12,000 m2), it is very realistic to be considered.

Figure 5.10: Biomass supply chain of district heating system by wood chips Model NP-1a

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš In Figure 5.10 not all distances are written, since the heating company buys the wood chips from a supplier determined by the public call procedure, which is responsible to find biomass, make wood chips and transport it to a district heating plant storage). This could be also a company outside Novi Pazar municipality, which implies that wood biomass resources could be also from some other municipality

In this scenario PC “Gradska toplana” needs to make a long term contract with the supplier.

Needed investments to conduct this scenario in accordance with assumed participant in BSC model are shown in Table 5.10.

BSC part Company Investments Price (€) FE “Šumarstvo“ Raška, FA “Novi Pazar“ or Biomass resources No investments 0 some other FE; PF, sawmills Storage (open) 0 Supply system Private company Storage (covered) 100,000 Conversion process PC ”Gradska toplana” Tractor with woodchips bucket** 60,000

* It is assumed that chosen supplier already possesses everything it needs to fulfil the role of the supplier. Of course, the investments depend on current state of the chosen supplier. **For wood chips manipulation on the DHP storage. Table 5.10: Needed investment in Model NP-1a

 Model NP-1, option 1b

In this option is assumed that will be used existing heating plant “Centralna” which will be extended for the space needed for 1 additional woody biomass-fired boiler.

In Figure 5.11 is shown the model for variant where the location of existing distric heating plant “Centralna” is used for extension of the boiler room with a wood biomass-fired boiler, as well as construction of storage building. Since the access road is narrow, the heating plant is surrounded by the residential buildings, the traffic in the surrounding streets is heavy, and the streets are narrow, in this case only small trucks could be used for supply of wood chips biomass. The distances are not written, since the storage space should be rented from an unkown owner (whether it is a FA “Novi Pazar” or “Hrast” or some other company with a storage space in or near Novi Pazar city).

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Figure 5.11: Biomass supply chain of district heating system by wood chips Model NP-1b

Needed investments to conduct this scenario in accordance with assumed participant in BSC model are shown in Table 5.11.

BSC part Company Investments Price (€) FE “Šumarstvo“ Raška, FA “Novi Pazar“ or Biomass resources No investments 0 some other FE; PF, sawmills Storage space PC “Gradska toplana” Storage building (220 m2) 55,000 Conversion process PC ”Gradska toplana” Tractor with woodchips bucket* 60,000 *for wood chips manipulation on the DHP storage. Already manually by shovels and wheelbarrows (it can be also solution in the future) Table 5.11: Needed investment in Model NP-1b

This variant has less investments, but its storing capacity, as well as access roads and transport possibilities are limited with the factors which cannot be overcommed.

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Model NP-2

Assumptions in this model are:  Biomass resources are: state forests (FE “Šumarstvo“ Raška, FA “Novi Pazar”), private forests (PF) and sawmills.  Wood chip supplier (Supplier) is newly established municipality enterprise for the wood chips or PC “Gradska toplana”.  PC “Gradska toplana” is end user of wood chips.

Who will be supplier in this model, newly established municipality enterprise or PC “Gradska toplana”, is a legal question.

Purchasing of raw material is same as in Model NP-1, buying from biomass resources, on the forest stock in case of FE “Šumarstvo” Raška, FA “Novi Pazar” and PF and on the sawmill site.

Wood chips are produced from the forest residues in forest stocks (field storage near the forest road) by supplier’s mobile wood chipper and from sawmill residue on sawmill site or intermediate storage rented by supplier depend on possibility.

Figure 5.12: BSC Model NP-2

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš As supplier and end users of wood chips are same company transportation and storage can be optimally organized.

In this scenario PC “Gradska toplana” needs to make contracts with the biomass resources.

Also estimated values of investment to conduct this scenario in accordance with assumed participant in BSC model are shown in Table 5.12.

BSC part Company Investments Price (€) FE “Šumarstvo” Raška, Biomass resources FA “Novi Pazar”; PF, No investments 0 sawmill Chipper 4-7 t/h (medium power) 40,000 PC ”Gradska toplana” or Supply system Truck and semitrailers (20-22 t) 155,000 Municipality enterprise Tractor with woodchips bucket 60,000 Conversion process PC ”Gradska toplana” Tractor with woodchips bucket* 60,000 *for wood chips manipulation on the DHP storage. Table 5.12: Needed investment in Model NP-2

Based on price from Table 5.2 and data from Figure 5.12 in Table 5.13 are shown calculated cost of working phase in BSC.

Working phase Cost (€/bcm) Raw material 7 Chipping 2.7 Transportation 1.5 Storage 0.5 Seasoning 0 Table 5.13: Calculated cost of working phase in BSC Model NP-2

 Model NP-3

Assumptions made in this model are as follows:  Biomass resources are FE “Šumarstvo” Raška, FA “Novi Pazar”, private forest (PF) and sawmill,  Wood chip supplier (Supplier) is PPP company,  PPP company or PC “Gradska toplana” is end user of wood chips.

Proposed Model NP-3 means public private partnership company as a supplier and conversion system. We can compare this model with previously explained Model NP-2, where municipality owned company is responsible for supply and conversion system as the only difference.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš The implementation of the activities in biomass supply chain Model NP-3 can be the same as in Model NP- 2, as well as investments needed. Private partner within the PPP company will invest in machinery and equipment in case of Model NP-3.

 Model NP-4

Assumptions made in this model are as follows:  Biomass resources are FE “Šumarstvo” Raška, FA “Novi Pazar”,  Wood chip supplier (Supplier) is FE “Šumarstvo” Raška, FA “Novi Pazar,  PC “Gradska toplana” is end user of wood chips.

Biomass resources and supplier is the same forest company, FE “Šumarstvo” Raška, FA “Novi Pazar”. In order to participate in wood chip supply is assumed that FE “Šumarstvo” Raška, FA “Novi Pazar” establishes specialized enterprise for the production of wood chips.

In Figure 5.13 is shown example of Model NP-4.

FE “Šumarstvo” Raška, FA “Novi Pazar” enterprise can communicate directly with the DHP as the wood chips end user. In this scenario PC “Gradska toplana” needs to make one long term contracts with the supplier.

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Figure 5.13: BSC Model NP-4

Needed investments to conduct this scenario in accordance with assumed participant in BSC model are shown in Table 5.14.

BSC part Company Investments Price (€) FE “Šumarstvo” Raška, Biomass resources No investments 0 FA “Novi Pazar” 2xChipper 4-7 t/h (medium power) 80,000 FE “Šumarstvo” Raška, Semitrailers (20-22 t) 45,000 Supply system FA “Novi Pazar” Covered storage 1,000m2 100,000 Woodchips bucket 10,000 FE ”Šumarstvo” Raška, Conversion process Tractor with woodchips bucket* 60,000 FA “Novi Pazar” *for wood chips manipulation at the DHP storage. Table 5.14: Needed investment in Model NP-4

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Based on price from Table 5.2 and data from Figure 5.13 in Table 5.15 are shown calculated cost of working phase in BSC.

Working phase Cost (€/bcm) Raw material 7 Chipping 2.7 Transportation 2.1 Storage 0.5 Seasoning 0 Table 5.15: Calculated cost of working phase in BSC NP-4

5.4.3 Proposed biomass supply models for heating plant in Bajina Bašta

Based on general presentation of modelling idea in previous chapter following biomass supply chain models has been designed for the heating plant Bajina Bašta.

The potential participants in woody biomass supply chain in Bajina Bašta in following scenarios are: a) Biomass resources  State Forests (PC “National Park Tara”)  Private Forests (private owners in the municipality Bajina Bašta)  Sawmill (about 100 registered and unregistered in the municipality Bajina Bašta) b) Supply system (wood chips suppliers)  Private company selected through the public tender (e.g. “Wood Produkt“ Ltd, “Gorštak” Ltd…)  Newly established municipality enterprise specialized for wood chips production or PC “BB Term”  PPP company  Newly established enterprise under PC “National Park Tara” specialized for the wood chips production c) Conversion process  PC “BB Term”  PPP company.

For the purpose of selection of most appropriate supply model we have designed several alternatives of Model.

 Model BB-1

Assumptions in the first scenario are:  Biomass resources are PC “National Park Tara”, private forest (PF) and sawmill.  Wood chip supplier (Supplier) is private company selected through the public tender.  PC “BB Term” is end user of wood chips.

Supplier are buying the raw material from different biomass resources, on the forest stock in case of PC “National Park Tara” and private forests and/or on the sawmill site.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Wood chips are produced from the forest residues in forest stocks (field storage near the forest road) by supplier’s mobile wood chipper and from sawmill residue on sawmill site or own site depend on possibility.

Wood chips are transported directly to the heating plant on-site storage or to the intermediate storages (supplier’s own or rented storage) and consequently to the heating plant storage according to the contracted time schedule, quantity and quality. Wood chips transport is ensured by the supplier’s transport.

On the Figure 5.11 is shown practical example of Model BB-1 whereas supplier is assumed interviewed company “Wood Produkt” Ltd. in order to provide exact data for distance, storage, etc.

In this scenario PC “BB Term” needs to make one long term contracts with the supplier.

Figure 5.14: BSC Model BB-1

Also estimated values of investment to conduct this scenario in accordance with assumed participant in BSC model are shown in Table 5.16.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš BSC part Companies Investments Price (€) PC “NP Tara”, PF, Biomass resources No investments 0 sawmill Chipper 4-7 t/h (medium power) 40,000 Private company Supply system Semitrailers (20-22 t) 45,000 (e.g. “Wood Produkt”) Tractor with woodchips bucket 60,000 280,000 Conversion process PC ”BB Term” Tractor with woodchips bucket* 60,000 *for wood chips manipulation on the DHP storage. Already manually by shovels and wheelbarrows (it can be also solution in the future) Table 5.16: Needed investment in Model BB-1

As mentioned in Chapter 4 in municipality Bajina Bašta there are a number of wood processing company and no wood chips producers. Some of sawmill and pellet producers are interested in expanding their production by producing the wood chips for the project purposes. It implies different possibility alternative of Model BB-1. One of possibility is Model BB-1.1 which assumes that heating plant selects 2 suppliers (Figure 5.15). Since there is no company with a huge wood processing capacity on the territory of municipality Bajina Bašta in this way the supply of wood chips will be more secure and reliable. Heating plant through the Model BB-1.1 can reduce risk regarding to the wood chips supply and each wood chip supplier will have lower initial investment amounts and therefore lower risk.

Figure 5.15: BSC Model BB-1.1

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Exact data regarding to the distance, storage... are not mentioned in Model BB-1.1 because of no available information from potential supplier 2. Needed investments for PC ”BB Term” are same as in the Model BB- 1.

 Model BB-2

Assumptions in this model are:  Biomass resources are PC “National Park Tara”, private forest (PF) and sawmill.  Wood chip supplier (Supplier) is newly established municipality enterprise specialized for the wood chips production or PC “BB Term”.  PC “BB Term” is end user of wood chips.

Who will be supplier in this model, newly established specialized municipality enterprise or PC “BB Term”, is a legal question.

Purchasing of raw material is the same as in the Model BB-1, buying woody biomass from biomass resources, on the forest stock in the case of PC “National Park Tara” and private forests and on the sawmill site.

Figure 5.16: BSC Model BB-2

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš As supplier and end users of wood chips are the same company transportation and storage can be optimally organized. Assumption is that supplier rent intermediate storage in Industrial zone Bajina Bašta as no own land is available for this purpose.

Wood chips are transported directly to the heating plant on-site storage or to the intermediate storages (supplier’s rented storage) and consequently to the heating plant on-site storage according to the needs. Wood chips transport is ensured by the supplier’s transport or rented from the transport company.

In this scenario PC “BB Term” needs to make contracts with the biomass resources.

Also estimated values of investment to conduct this scenario in accordance with assumed participant in BSC model are shown in table 5.17.

BSC part Companies Investments Price (€) PC “NP Tara”, PF, Biomass resources No investments 0 sawmill Chipper 4-7 t/h (medium power) 40,000 PC ”BB Term” or Supply system Truck and semitrailers (20-22 t) 155,000 Municipality enterprise Tractor with woodchips bucket 60,000 280,000 Conversion process PC ”BB Term” Tractor with woodchips bucket* 60,000 *for wood chips manipulation on the DHP storage. Already manually by shovels and wheelbarrows (it can be also solution in the future) Table 5.17: Needed investment in Model BB-2

Based on price from Table 5.2 and data from Figure 5.16 in Table 5.18 are shown calculated cost of working phase in BSC.

Working phase Cost (€/bcm) Raw material 7 Chipping 2.6 Transportation 1.6 Storage 0.5 Seasoning 0 Table 5.18: Calculated cost of working phase in BSC Model BB-2

 Model BB-3

Assumptions in this model are:  Biomass resources are PC “National Park Tara”, private forest (PF) and sawmill.  Wood chip supplier (Supplier) is PPP Company.  PPP Company or PC “BB Term” is end user of wood chips.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Proposed Model BB-3 means public private partnership company as supplier system and conversation system. We can compare this model with previous explained Model BB-2, where is municipality owned company is responsible for supply and conversation part of the system as only difference.

The implementation of activity in biomass supply chain Model BB-3 can be same as in Model BB-2 as well as needed investments. Private partner within the PPP Company are investing in machinery and equipment in case of Model BB-3.

 Model BB-4

Assumptions in this model are:  Biomass resources are PC “National Park Tara”  Wood chip supplier (Supplier) is PC “National Park Tara”.  PC “BB Term” is end user of wood chips.

Biomass resources and supplier are the same forest company, PC “National Park Tara”. In order to participate in wood chip production and supply it is assumed that PC “National Park Tara” establishes specialized enterprise for the wood chips production.

Wood chips are transported directly to the heating plant on-site storage or to the intermediate storages (supplier’s rented storage in Industrial zone in Bajina Bašta) and consequently to the heating plant on-site storage according to the contracted time schedule, quantity and quality. Wood chips transport is ensured by the supplier’s transport. On the Figure 5.17 is shown practical example of Model BB-4 with data for distance, storage, etc. PC “National Park Tara” enterprise can communicates directly with the DHP as wood chips end users. In this scenario PC “BB Term” needs to make a long term contracts with the supplier.

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Figure 5.17: BSC Model BB-4

Estimated values of investment to conduct this scenario in accordance with assumed participant in BSC model are shown in Table 5.19.

BSC part Companies Investments Price (€) Biomass resources PC “NP Tara” No investments 0 2xChipper 4-7 t/h (medium power) 80,000 Semitrailers (20-22 t) 45,000 Supply system PC “NP Tara” Covered storage 500m2 50,000 Woodchips bucket 10,000 280,000 Conversion process PC ”BB Term” Tractor with woodchips bucket* 60,000 *for wood chips manipulation on the DHP storage. Already manually by shovels and wheelbarrows (it can be also solution in the future) Table 5.19: Needed investment in Model BB-4

Based on price from Table 5.2 and data from Figure 5.17 in Table 5.20 are shown calculated cost of working phase in BSC.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Working phase Cost (€/bcm) Raw material 7 Chipping 2.6 Transportation 2.1 Storage 0.5 Drying 0 Table 5.20: Calculated cost of working phase in BSC Model BB-4

5.4.4 Proposed biomass supply models for heating plant in Nova Varoš

Based on general presentation of modelling idea in previous chapter following biomass supply chain models has been designed for the heating plant Nova Varoš.

The potential participants in woody biomass supply chain in Nova Varoš in following scenarios are: a) Biomass resources  State Forests (FA “Nova Varoš”), FE “Prijepolje”, PC “Srbijašume”  Private Forests (private owners in the municipality Nova Varoš)  Sawmill (about 160 registered and unregistered in the municipality Nova Varoš) b) Supply system (wood chips suppliers)  Private company selected through the public tender (e.g. “Nanix Wood“ Ltd, “Star Jela” Ltd. Prijepolje…)  Newly established municipality enterprise specialized for wood chips production or PC “Energija Zlatar”  PPP company  Newly established specialized enterprise under PC “Srbijašume” for the wood chips production c) Conversion process  PC “Energija Zlatar”  PPP company.

For the purpose of selection of most appropriate supply model we have designed several alternatives of model.

 Model NV-1

Assumptions in the first scenario are:  Biomass resources are FA “Nova Varoš”, private forest (PF) and sawmill.  Wood chip supplier (Supplier) is private company selected through the public tender.  PC “Energija Zlatar” is end user of wood chips.

Supplier are buying the raw material from biomass resources, on the forest stock in case of FA “Nova Varoš” and private forest and on the sawmill site.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Wood chips are transported directly to the heating plant on-site storage or to the intermediate storages (supplier’s own or rented storage) and consequently to the heating plant on-site storage according to the contracted time schedule, quantity and quality. Wood chips transport is ensured by the supplier’s transport.

On the Figure 5.18 has shown practical example of Model NV-1 whereas supplier is assumed company “Nanix Wood” Ltd. Data for distance, storage and equipment are assumed based on the information from municipality and PC “Energija Zlatar”, as company “Nanix Wood” Ltd. did not provided asked information.

In this scenario PC “Energija Zlatar” needs to make a long term contracts with the supplier.

Figure 5.18: BSC Model NV-1

Also estimated values of investment to conduct this scenario in accordance with assumed participant in BSC model are shown in Table 5.21.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš BSC part Companies Investments Price (€) Biomass resources PC “NP Tara”, PF, sawmill No investments 0 Private company Supply system No investments 0 (e.g. “Nanix Wood”) Conversion process PC ”Energija Zlatar” Tractor with woodchips bucket* 60,000 *for wood chips manipulation on the DHP storage Table 5.21: Needed investment in Model NV-1

As mentioned in Chapter 4 municipality manager proposed company “Star Jela” from Prijepolje, big wood chips producer, as potential wood chips supplier. It implies different possibility alternative of Model NV-1. One of possibility is Model NV-1.1 which assumes that heating plant selects 2 suppliers. In this way the supply of wood chips will be more secure and reliable. Heating plant through the Model NV-1.1 can reduce risk regarding to the wood chips supply and chips supplies will have lower initial investment cost and therefore lower risk.

 Model NV-2

Assumptions in this model are:  Biomass resources are FA “Nova Varoš”, private forest (PF) and sawmill.  Wood chip supplier (Supplier) is new established municipality special enterprise for the wood chips or PC “Energija Zlatar”.  PC “Energija Zlatar” is end user of wood chips.

Who will be supplier in this model, new established municipality special enterprise or PC “Energija Zlatar”, is legal question.

Purchasing of raw material is same as in Model NV-1, buying from biomass resources, on the forest stock in case of FA “Nova Varoš” and PF and on the sawmill site. Wood chips are produced from the forest residues in forest stocks (field storage near the forest road) by supplier’s mobile wood chipper and from sawmill residue on sawmill site or intermediate storage rented by supplier depend on possibility.

As supplier and end users of wood chips are same company transportation and storage can be optimally organized. Location for new biomass boiler is a greenfield with enough land for biomass storage, no necessity for intermediate storage.

Wood chips are transported directly to the heating plant storage. Wood chips transport is ensured by the supplier’s transport or rented from the transport company.

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Figure 5.19: BSC Model NV-2

In this scenario PC “Energija Zlatar” needs to make contracts with the biomass resources. Also estimated values of investment to conduct this scenario in accordance with assumed participant in BSC model are shown in Table 5.22.

BSC part Companies Investments Price (€) FA “Nova Varoš”, PF, Biomass resources No investments 0 sawmill PC ”Energija Zlatar” or Chipper 2-3 t/h (small power) 20,000 Supply system Municipality enterprise Truck and semitrailers (20-22 t) 155,000 Conversion process PC ”Energija Zlatar” Tractor with woodchips bucket* 60,000 *for wood chips manipulation on the DHP storage. Table 5.22: Needed investment in Model NV-2

Based on price from Table 5.2 and data from Figure 5.19 in Table 5.23 are shown calculated cost of working phase in BSC.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Working phase Cost (€/bcm) Raw material 7 Chipping 3.2 Transportation 1.5 Storage 0.5 Seasoning 0 Table 5.23: Calculated cost of working phase in BSC NV-2

 Model NV-3

Assumptions in this model are:  Biomass resources are FA “Nova Varoš”, private forest (PF) and sawmill.  Wood chip supplier (Supplier) is PPP Company.  PPP Company or PC “Energija Zlatar” is end user of wood chips.

Proposed Model NV-3 means public private partnership company as supplier system and conversation system. We can compare this model with previous explained Model NV-2, where is municipality owned company responsible for supply and conversation system as only difference.

The implementation of activity in biomass supply chain Model NV-3 can be same as in Model NV-2 as well as needed investments. Private partner within the PPP Company are investing in machinery and equipment in case of Model NV-3.

 Model NV-4

Assumptions in this model are:  Biomass resources are FE “Prijepolje”  Wood chip supplier (Supplier) is PC “Srbijašume”  PC “Energija Zlatar” is end user of wood chips.

Biomass resources and supplier are the same forest company, PC “Srbijašume” enterprise. In order to participate in wood chip supply it is assumed that PC “Srbijašume” establishes specialized enterprise for the wood chips production Probably in the case of municipality Nova Varoš the newly established enterprise can be on the level of FE “Prijepolje”.

Fuel chips are produced from the crown parts of the trees of principal and intermediate cutting, whole trees from the thinning and wood waste occurred during the assortment production in forest stocks by supplier’s mobile wood chipper.

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Figure 5.20: BSC Model NV-4

Wood chips are transported directly to the heating plant storage or to the intermediate storages (is assumed that supplier rent storage in 2-4 km far from the new biomass boiler room) and consequently to the heating plant storage according to the contracted time schedule, quantity and quality. Wood chips transport is ensured by the supplier’s transport.

On the Figure 5.20 is shown practical example of Model NV-4 with data for distance, storage, etc.

PC “Srbijašume” enterprise can communicates directly with the DHP as wood chips end users. In this scenario PC “Energija Zlatar” needs to make one long term contracts with the supplier.

Estimated values of investment to conduct this scenario in accordance with assumed participant in BSC model are shown in table 5.24.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš BSC part Companies Investments Price (€) Biomass resources FE “Prijepolje” No investments 0 2x Chipper 2-3 t/h (small power) 40,000 Semitrailers (20-22 t) 45,000 Supply system PC “Srbijašume” Covered storage 250m2 25,000 Woodchips bucket 10,000 280,000 Conversion process PC “Energija Zlatar” Tractor with woodchips bucket* 60,000 *for wood chips manipulation on the DHP storage. Table 5.24: Needed investment in Model NV-4

Based on price from Table 5.2 and data from Figure 5.21 in Table 5.25 are shown calculated cost of working phase in BSC.

Working phase Cost (€/bcm) Raw material 7 Chipping 3.2 Transportation 2.1 Storage 0.5 Seasoning 0 Table 5.25: Calculated cost of working phase in BSC Model NV-4

5.5 DESIGNING INTEGRATED MODELS OF BIOMASS SUPPLY CHAIN

In order to provide optimal model of biomass supply chain it is analysed possibility of municipality clustering. All four municipalities is analysed regarding to this topic but municipalities Nova Varoš and Priboj in more details as these two municipalities are neighbours (Figure 5.21).

Generally, municipality authorities are not taking in consideration or they are not interested in clustering at this moment, but maybe it can be possible in future.

The authorities of Nova Varoš municipality mentioned that cooperation with other municipalities can slow the progress of the project as the main reason for non-clustering. The municipality plans to start project as soon as possible. Also some other reasons are distance between 2 municipalities, long and cold winter with lot of snow that can impact successful using of infrastructure and machinery jointly. It is also important to note that similar clustering project with municipality Priboj regarding the municipality waste failed.

As a basis for further municipality clustering in a field of biomass utilisation one integrated model is designed. It is assumed clustering of municipalities Nova Varoš and Priboj.

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Figure 5.21: Locations of the municipalities analysed in this study

Assumptions in this model are:  Biomass resources are FE “Prijepolje”, private forest (PF) and sawmill,  Wood chip supplier (Supplier) is newly established specialized enterprise through the clustering of municipalities Nova Varoš and Priboj,  PC “Energija Zlatar” and PC “Toplana Priboj” are end users of wood chips.

It is proposed that intermediate storage is situated in the boundary area between Nova Varoš and Priboj municipalities near the main road that connects the cities Nova Varoš and Priboj (see Figure 5.18). In that way transportation can be optimally organized.

Supplier are buying the raw material from biomass resources, on the forest stock from FE “Prijepolje” and private forests and on the sawmill site. Wood chips are produced from the forest residues in the forest stocks (field storage near the forest road) by supplier’s mobile wood chipper and from sawmill residue on sawmill site or supplier’s intermediate storage depend on the possibilities.

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Figure 5.22: BSC integrated Model

As supplier and end users of wood chips are municipalities’ enterprises, transportation and storage can be optimally organized. Wood chips are transported directly to the heating plants on-site storages or to the intermediate storages (supplier’s own or rented storage) and consequently to the heating plants on-site storages according to the needs. Wood chips produced at the greater distance from the intermediate storage will be directly transported to the heating plant on-site storage. Wood chips produced in the area of intermediate storage will be transported to the intermediate storage. Locations for the new biomass boilers in both municipalities are with enough space for biomass on-site storage. It implies no necessity for high-capacity intermediate storage. Also, supply of heating plants with wood chips from intermediate storage can be synchronized between the heating plants. Wood chips transport is ensured by the supplier’s transport or rented from the transport company.

On the Figure 5.22 is shown practical example of integrated model where are assumed distance, storage capacity, etc.

Also estimated values of investment to conduct this scenario in accordance with assumed participants in BSC model are shown in table x. Investment value for the conversation system (heating plants) is already mentioned in own BSC model of the municipalities.

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BSC part Companies Investment Price (€) FA “Nova Varoš”, PF, Biomass resources No investment 0 sawmill 2xChipper 2-3 t/h (small power) 40,000 Municipalities clustering Supply system 2xTruck and semitrailers (20-22 t)* 310,000 enterprise Tractor with woodchips bucket 60,000 * If buy new trucks. The trucks can be rented. Table 5.26: Needed investment in integrated model

For the application of such models in the future in order to reduce investment cost and lower the cost for operation it is necessary to improve legal procedure for clustering ant ensure faster realisation of such a project. The examples of good practice can be “the best driver” of such activities.

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6. SELECTION OF OPTIMAL MODELS OF BIOMASS SUPPLY CHAIN

6.1 PROPOSED OPTIMAL MODELS

6.1.1 Optimal supply model for Priboj municipality

In the table below are summarised estimated investment value and cost of working phase for all proposed BSC model for municipality Priboj.

Model Pb-1a Model Pb-2 Model Pb-3 Model Pb-4 BSC part Model Pb-1b (€) Biomass resources 0 0 0 0 Supply system 100,000 255,000 255,000 235,000 Conversion process 60,000 60,000 60,000 60,000 Working phase (€/bcm)

Raw material 7 7 7 Chipping 2.6 2.6 2.6 Transportation ** 1.3 1.3 2.1 Storage 0.5 0.5 0.5 Seasoning 0 0 0

* Depend on supplier selected through the public tender. **In Model Pb-1a and Model Pb-1b price of wood chips is defined is determined by public tender Table 6.1: Investments and costs in biomass supply chain models in Priboj municipality

Based on the value from Table 6.1, legal framework, possible period of project implementation as well as opinion and plans of the authorities of Priboj municipality proposed optimal model is Model Pb-1a.

Proposed optimal model is legally clear. All relations between participants in woody biomass supply chain already exist in business practice. Biomass resources (FE “Prijepolje”, FA “Priboj”, owners of private forests and sawmills) and supply system (probably wood processing company) already cooperate in selling/buying raw materials. DHP select companies for wood chips supply through the public tender in the same way as they currently select fossil fuel suppliers. For these reasons, practical application of this model is the fastest and what authorities of Priboj municipality have identified as very important.

Required investments in this model are lowest compared to other proposed models in terms of all the participants of the woody biomass supply chain. Investment value for the biomass supplier depends on the technical equipment which currently owns selected companies. The required level of investment for the municipality enterprise is minimal.

Proposed optimal model assume selection of 2 suppliers which implies lower initial investment for each suppliers. Also, supply of wood chips will be more secure and reliable. This is very important issue as there is no company with huge wood processing capacity on the territory of Priboj municipality.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš This model assumes generally 2 types of contracts, between owners of raw materials and wood chips supplier as well as between supplier and DHP. There is a need for long term contract. Actually raw material supplier (FE “Prijepolje”) provide 1 year contract.

Given that the wood chips supplier are selected through the public tender and therefore price of wood chips DHP cannot optimized the logistic concept and wood chips price. DHP would be able to achieve a better price if engaged in supply system. It involves investment and new organization and at this moment it is not realistic, but it can be set as a target in near future.

6.1.2 Optimal supply model for Novi Pazar municipality

In the table below are summarised estimated investment value and cost of working phase for all proposed BSC model for Novi Pazar municipality.

Model NP-1a Model NP-1b Model NP-2 Model NP-3 Model NP-4 BSC part (€) Biomass resources 0 0 0 0 0 Supply system 100,000 55,000 255,000 255,000 235,000 Conversion 60,000 60,000 60,000 60,000 60,000 process Working phase (€/bcm) 7 Raw material 7 7 2.7 Chipping 2.7 2.7 1.5 Transportation ** 1.5 2.1 0.5 Storage 0.5 0.5 0 Seasoning 0 0

* Depend on supplier selected through the public tender. **In Model NP-1a and Model NP-1b price of wood chips is defined is determined by public tender Table 6.2: Investments and costs in biomass supply chain models in Novi Pazar municipality

Based on the value from Table 6.2, legal framework, possible period of project implementation as well as opinion and plans of the authorities of Novi Pazar municipality, on the proximity and accessibility of access roads potentially big storage area (12,000 m2), proposed optimal model is Model NP-1a.

Proposed optimal model is not fully legally clear because of the unsolved land proprietary issues, but it is expected to be resolved soon. Other legal aspects are clear. All relations between participants in woody biomass supply chain already exist in business practice. Biomass resources (FE “Šumarstvo”, FA “Novi Pazar”, owners of private forests and sawmills) and supply system (probably wood processing company) already cooperate in selling/buying raw materials. DHP select companies for wood chips supply through the public tender in the same way as they currently select fossil fuel suppliers. For these reasons, practical application of this model is the fastest and what authorities of Novi Pazar municipality have identified as very important.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Proposed optimal model assume selection of 2 suppliers which implies lower initial investment for each suppliers. Also, supply of wood chips will be more secure and reliable. This is very important issue as there is no company with huge wood processing capacity on the territory of Novi Pazar municipality.

This model assumes generally 2 types of contracts, between owners of raw materials and wood chips supplier as well as between supplier and DHP. There is a need for long term contract. Actually raw material supplier (FE “Šumarstvo” Raška, FA “Novi Pazar”) provides 1 year contract.

Given that the wood chips supplier are selected through the public tender and therefore price of wood chips DHP cannot optimize the logistic concept and wood chips price. DHP would be able to achieve a better price if engaged in supply system. It involves investment and new organization and at this moment it is not realistic, but it can be set as a target in near future.

6.1.3 Optimal supply model for Bajina Bašta municipality

In the table below are summarised estimated investment value and cost of working phase for all proposed BSC model for municipality Bajina Bašta.

Model BB-1 Model BB-2 Model BB-3 Model BB-4 BSC part Model BB-1.1 (€) Biomass resources 0 0 0 0 Supply system 145,000* 255,000 255,000 185,000 Conversion process 60,000 60,000 60,000 60,000 Working phase (€/bcm)

Raw material 7 7 7 Chipping 2.6 2.6 2.6 Transportation ** 1.6 1.6 2.1 Storage 0.5 0.5 0.5 Seasoning 0 0 0

* Depend on supplier selected through the public tender. Value in table based on company “Wood Produkt” **In Model BB-1 and Model BB-1_1 price of wood chips is defined is determined by public tender Table 6.3: Investments and costs in biomass supply chain models in Bajina Bašta municipality

Based on the value from Table 6.3, legal framework, possible period of project implementation as well as opinion and plane of authorities of Bajina Bašta municipality proposed optimal model is Model BB-1.1.

Proposed optimal model is legally clear. All relations between participants in woody biomass supply chain already exist in business practice. Biomass resources (PC “NP Tara”, owners of private forest and sawmill) and supply system (probably wood processing company) already cooperate in selling/buying raw materials. DHP select companies for wood chips supply through the public tender in the same way as that currently selects fossil fuel suppliers. For these reasons, practical application of this model is fastest and what authorities of Bajina Bašta municipality have identified as important.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Proposed optimal model assume selection of 2 suppliers which implies lower initial investment for each suppliers. Also, supply of wood chips will be more secure and reliable. This is very important issue as no company with huge wood processing capacity on the territory of municipality Bajina Bašta.

Given that the wood chips supplier are selected through the public tender and therefore price of wood chips DHP cannot optimize logistic concept and wood chips price. DHP would be able to achieve a better price if engaged in supply system. It involves investment and new organization and at this moment it is not realistic but it can be target in near future.

6.1.4 Optimal supply model for Nova Varoš municipality

In the table below are summarised estimated investment value and cost of working phase for all proposed BSC model for municipality Nova Varoš.

Model NV-1 Model NV -2 Model NV -3 Model NV -4 BSC part Model NV -1.1 (€) Biomass resources 0 0 0 0 Supply system 0* 175,000 175,000 120,000 Conversion process 60,000 60,000 60,000 60,000 Working phase (€/bcm)

Raw material 7 7 7 Chipping 3.2 3.2 3.2 Transportation ** 1.5 1.5 2.1 Storage 0.5 0.5 0.5 Seasoning 0 0 0

* Depend on supplier selected through the public tender. Value in table based on companies “Star Jela”, Prijepolje and “Nanix Wood”, Nova Varoš **In Model NV-1 and Model NV-1_1 price of wood chips is defined is determined by public tender Table 6.4: Investments and costs in biomass supply chain models in Nova Varoš municipality

Based on the value from Table 6.4, legal framework, possible period of project implementation as well as opinion and plane of authorities of Nova Varoš municipality proposed optimal model is Model NV-1.1.

Proposed optimal model is legally clear. All relations between participants in woody biomass supply chain already exist in business practice. Biomass resources (FA “Nova Varoš”, owners of private forest and sawmill) and supply system (probably wood processing company) already cooperate in selling/buying raw materials. DHP select companies for wood chips supply through the public tender in the same way as that currently selects fossil fuel suppliers. For these reasons, practical application of this model is the fastest what authorities of Nova Varoš municipality have identified as important.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Wood” already have all necessary technical equipment and experience in wood chips producing. The required level of investment for the municipality enterprise is minimal.

Proposed optimal model assumes selection of 2 suppliers. Both proposed suppliers expressed possibility to supply total required amount of wood chips but supply of wood chips will be more secure and reliable with 2 suppliers. Also, it will create competition and better wood chips market.

The authorities of Nova Varoš municipality are planning to engage in supply system. It involves investment and new organization and at this moment it is not realistic. It can be one of the future activities in order to achieve a better price of wood chips.

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7. CONTRACTING

In this chapter is presented a series of models headings together with the suggestions for the contracts between a district heating plant and biomass suppliers as well as between suppliers and owners of raw materials. For each model is provided a representative example from Serbian and EU practice.

The development of formal contractual arrangements provides benefits and security to both parties. In general the contract should be transparent, quantifiable, endeavour to cover all unforeseen circumstances and provide an equitable balance from the point of view of both parties.

7.1 MODEL OF CONTRACTS BETWEEN A DISTRICT HEATING PLANT AND A BIOMASS SUPPLIER

Contracts between a district heating plant and biomass supplier should aim to cover the following aspects: a) Obligations for the supplier:  Quantities and qualities of provided fuel  Delivery location, frequencies and times  Penalties for failures in delivery  Delivery equipment requirements  Certificates for the fuel qualities (e.g. a specification covering wood chips sourced sustainably or from a maximum distance) b) Obligations for the client:  Prices and payment schedules  Access to the building/site  Safety measures  Skills of the staff for handling fuels  Availability of the staff during delivery  Responsibility for maintenance of relevant equipment (e.g. meters) c) Other important elements:  Agreement on how delivery schedules are arranged (by phone, in writing, how much in advance etc.)  Agreements how the fuel quality is checked – simple, but effective method to test fuel quality on site  Financial guarantees, invoicing schedules  Long term contracts (e.g. 7 years and longer) with a price index ensure a stable business environment for a biomass suppler and a district heating plant  Fulfilment of legal requirements, especially safety measures

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš  Basic agreements of existing fuel standard (if available)  Contracted prices of wood chips.

There are three different systems for the settlement of wood chips prices commonly use in contracts between district heating plant and a biomass supplier: based on (a) the produced amount of heat, (b) the supplied weight and water content and (c) the supplied volume. Each of the three systems is briefly discussed here.

 A price settlement based on the produced amount of heat

If fuel is procured on the basis of delivered heat, the contractor must take into account the loss of energy within a boiler. It is therefore important that both the end user and fuel supplier take this into account when assessing the volume of fuel required and the cost penalty of the inefficiency losses. A contract should include a statement or quantification of the boiler’s efficiency, and how issues of poor efficiency should be resolved. It should also set out annual and routine maintenance procedures.

Advantages Disadvantages Independent of wood species and bulk density Dependent on annual utilisation rate of the plant Independent of wood fuel moisture content Estimation of the annual utilisation rate necessary Economical method for determining the supplied Differentiated payment in case of multiple energy quantity suppliers hard to near impossible Table 7.1: Price settlement based on the produced amount of heat – advantages and disadvantages; Source: [17]

Serbian example: The district heating plant fired on sunflower seed shell as fuel has contracted the price of input biomass based on the produced amount of heat as well as equivalent consumption of natural gas which is replaced by the biomass in the accounting period.

 A price settlement based on supplied weight and moisture content

In the price settlement based on the supplied weight the type of wood species and its bulk density plays no role; however the representative moisture content of a delivery must be known to determine the energy content. Measuring the weight takes a place on a weighing bridge (either on-site or on a publicly accessible bridge). If sufficient accurate, trucks equipped with weight sensors can use their own measuring system.

The moisture content is determined either through estimation based on empirical values or through the sampling. The price for the delivered woody biomass is specified on the basis of the energy content per ton of dry matter. Because of the relatively high cost this price method is usually only applied at larger biomass heating plants.

Advantages Disadvantages Measurement of weight & moisture content is Independent of wood species and bulk density necessary High accuracy concerning energy content Calculation of the dry weight is necessary There is an incentive to optimise the energy content Relatively time-consuming and costly of the supplied wood assortments In the previous period few conflicts was raised - due to fair settlement of the supplied quality Table 7.2: Price settlement based on the supplied weight – advantages and disadvantages; Source: [17]

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Serbian example: One private company has bought biomass (straw) for own use and contracted price of biomass is based on the supplied weight and moisture content. In the contract is agreed accounting moisture content (e.g. 15%) and maximum moisture content (e.g. 25%). Deviation of moisture from the accounting quality is charged in the plus and minus, in the ratio of 2:1, the price is reduced or increased to the double percentage deviation from the agreed moisture content (e.g. +1% deviation of moisture content involve -2% reduction in the price).

EU example: Company from Denmark –has signed contract for the supply of wood chips to the Power Station [18] using following:

“The price of wood chips for settlement is adjusted according to moisture content using the following formula:

Hn = 19.0 – (0.2144 x F)

Where Hn is the lower calorific value stated as GJ/tonne (average), and F is the moisture content of the wood chips stated as percentage of the total weight.”

“DHP shell pay to wood chips supplier the target price for wood chips equal to XX €/t (+ VAT) at M 30. Prices vary according to the moisture of the wood chips delivered. Moisture in the wood chips delivered shell never exceeds 35%. The following table show the variation in price according to the 4 class of moisture content.” [13]

Moisture class content €/t (VAT excl.) M 20 15 – 20% 95 M 25 21 – 25% 90 M 30 26 – 30% 85 M 35 31 – 35% 80 Table 7.3: Calculation of the wood chip price is based on moisture content. The input price is used as an example

COMMENTS: from the previous examples it can be seen that also maximum acceptable moisture of supplied wood chips are defined.

 A price settlement based on supplied volume

A method that is widespread in Austria is settlement based on the supplied volume. This is a very inaccurate procedure, as the bulk and solid density of the supplied material can vary strongly. It is a popular method, however, because determining the supplied volume is very simple and cost-effective. Commonly different prices apply to deciduous hardwood, deciduous softwood and coniferous wood. Prices are agreed based on the estimated energy content per m3 loose for different types and species and as a function of the moisture content (dry, freshly harvested). In many cases even the estimation of the energy content and/or the use of correction factors for the moisture content are not carried out, and settlements are simply based on the supplied volume [17].

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Advantages Disadvantages Simple determination of the volume Large uncertainty over the energy content Settlement in the case of multiple suppliers is not Numerous conflicts because of differences in causing any problems supplied wood chip qualities No incentive to optimise the energy content of the supplied wood assortments Table 7.4: Price settlement based on the supplied volume – advantages and disadvantages; Source: [17]

EU example: The following table show the price settlement based on supplied volume [19].

M 30 M 35 M 40 M 50 dry little dry humid wet M 20 – 29.9% M 30 – 34.9% M 35 – 39.9% M 40 – 49.9% soft wood hard wood soft wood hard wood soft wood hard wood soft wood hard wood (bulk m3) (bulk m3) (bulk m3) (bulk m3) (bulk m3) (bulk m3) (bulk m3) (bulk m3)

10.76 15.23 9.81 13.87 8.33 11.72 6.38 8.98 Table 7.5: Calculation of the wood chip price is based on moisture content (Price is used as an example.)

 Quantities and qualities of fuel provided

Serbian example: District heating plant in the contract has defined approximate amount of biomass fuel for one heating season. For each heating season biomass supplier and DHP jointly prepare the schedule of the required amounts of biomass on a monthly and weekly basis, which will be the basis for the delivery schedule of biomass, taking into account the available capacity of the biomass storage at DHP site.

EU example: Wood chip company form Denmark -has contracted to supply with the wood chips to the Power Plant [18]

“A total of X,XXX tones of wood chips from hardwood and softwood delivered carriage paid to Power Company ± 10% at the buyer's discretion.

The company that produced wood chip is entitled to reduce the quantities stated in the Contract at any time, provided that technical or operational conditions with the power company necessitate such reduction. The Parties must cooperate to find a solution which contributes to mitigating the reduced quantities.

If supplier reduces the quantities delivered to the power station, such reduction must be distributed proportionately onto all suppliers of wood chips to the power station in question.”

COMMENTS: in previous example supplier of the wood chips can be seen reduction of delivered quantities in case of more than one wood chips supplier.

“The wood chips supplied must meet the quality requirements and other conditions for supply of wood chips to Power Company as stated in the Conditions.

Supplier of the wood chips is entitled, but not obliged, to perform quality control of the wood chips on delivery or after unloading.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš If supplier assesses that the wood chips do not meet the applicable quality requirements, supplier is entitled to reject one or more loads of wood chips, also after the wood chips have been unloaded at the power station in question.”

“The quantity of the wood chips to be delivered during the period of validity of this contract is equal to the quantity of wood chips that will actually be consumed by the plant during the heating season. On the basis of energy calculations it is estimated that his quantity will be XX t (with reference moisture (M) of 30%)” [13].

“The wood chips delivered shall be the product of mechanical processing of virgin wood as is stated in technical specification CEN/TS 14961. Wood chips shall be obtained from the chipping: branchless conifers or broad-leaf trunks slash and slabs and other and other primary conversion waste products from which it is possible to obtain high quality wood chips.”

As concerns wood chips references, is made to the technical specification CEN/TS 14961. The wood chips delivered shall belong to class P45.”

COMMENT: in previous example it is shown how to include in the contract quality of delivered wood chips regarding to the acceptable species.

 Delivery location, frequencies and times

Serbian example: “Seller shall at its own expense deliver required amount of biomass into the DHP biomass storage according to the required time schedule for a smooth production process. Delivered and stored biomass in DHP storage is the property of the Supplier until the biomass is not consumed in the production process of the DHP.

COMMENT: in previous Serbian DHP example it is shown possibility that biomass is in supplier property up to consuming in DHP boilers.

EU example: “Wood chips supplier commits to delivering each load of fuel within 6 working days of receipt of a written request sent by DHP either by fax or by e-mail. DHP shall also notify wood chips supplier of the entity of the load to be delivered expressed in ton.” [13]

7.2 MODEL OF CONTRACTS BETWEEN BIOMASS SUPPLIERS AND OWNERS OF RAW MATERIALS

Potential sources of raw material for wood chips productions are public forest, private forest and sawmill.

 PC “Srbijašume” – public forest

PC “Srbijašume” manage public forests. As mentioned in Chapter 4, PC “Srbijašume” provide 1 year contract for buying wood assortments. At the end of each year PC “Srbijašume” is published public call for contracting purchase of wood assortments in the next year on the basis of harvesting plan and defined price. Criteria for the selection of buyers are based on the following elements:  The past cooperation (fulfil of previous contractual obligations).  Do they have installed their own wood processing capacity?  Wood processing stage which perform.  The degree of development of the municipality where is situated the headquarters of the Buyer, or processing facilities with a majority of the employees.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš The buyers are sending a request for contracting in which are mentioned wood species, quantity and delivery time (Table 7.6).

Required Required delivery time Wood species Class Quantity I-II III-IV V-VI VII-VIII IX - X XI - XII

1. Table 7.6: Example how to determine quantities, qualities and delivery schedule

Also, in request for contracting buyer has to mentioned contracted and received amount of wood in previous year as well as payment level in previous year. The reason for this is cases that contracted amount of wood are not fully received from the buyer.

Method of payment is very important when buying wood from PC “Srbijašume” and proposed options for this are:  Advance, with the obligation to deliver two registered promissory notes when signing contract.  Payment via bank transfer 30 or 45 days after receiving of wood, with a bank guarantee.

 Private forest owners

In case of buying wood from private forest owners usually do not make contract. Purchase is based on the personal agreements. To improve usage of private forests legal relation between woody biomass buyer and private forest owner need to be regulated. This issue should be solved through the Associations of the owners of private forests. Currently situation regarding this association is described in following paragraphs.

Although there are few associations of the owners of private forests, in Serbia it still has not reached the level to become as important and strong in economical and interests terms, as it is the case in the most of the developed countries of Central and North Europe [2]. Hence in the analysed municipalities there are a lot of small forest parcels and they are divided among different owners, it is not possible permanent and efficient managing by the forests. Building of new associations of the owners of small parcels could be encouraged and administratively made easier, if the help of the state is directed through these associations. No matter, which of the forms of association is being formed, it is necessary that the forest ownership is not changed by the uniting process. The goal of the owner is to get financial profit by this process, but at the same time to stay the only owner of his/her estate.

Two major organizational types are described in [25]:

1. Informal organization type, where no organizational body and therewith no central control or disposition of resources exists. The following subtypes can be identified: informal arrangements which include agreements (without contract) concerning the use of resources by clearly defined owners of the resources, management by contract with specific contract based arrangements regarding the use of resources between clearly defined partners, certification, where guidelines for the use of resources by an unspecified number of partners are established, setting standards for forest resource management, and joint forest management with contract based agreements between a well defined number of owners of forest land to create a larger joint property by the merger of smaller individual units.

2. Formal (corporate) organization type with various levels of central control and disposition of resources. The main subtypes are: personal partnerships (an organization consisting of a fixed number of individuals, who jointly agree how to dispose of the available resources, and all decisions

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš are made by the members assembly), corporation, association, co-operative and related forms (these organizational types do not depend on the existence of specific owner of the resources, but the control and disposition of resources (decision making on investments and activities) is carried out by the official bodies (e.g. board of executives, manager, chairman) of the organization.

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8. OVERVIEW OF OBSERVED SITUATION AND IDENTIFIED LEGALE OBSTACLES

8.1 MUNICIPALITY PRIBOJ

Management of heating plant in Priboj is not interested in public-private partnership. Information obtained from neighbouring country about the problems regarding the PPP model in the praxis had huge influence on evaluation of this idea. They estimated that payback period of biomass-fired boiler will be about 4 years. It will not be possible to cover all of the expenses from the budget of municipality only, and hence they are planning to take a credit (in total 8,049,480 EUR) [24].

In the case of fuel switching the heating plant management has developed several ideas how to purchase and secure necessary amounts of wood chips during heating seasons. Potential suppliers of wood chips will be “Koran” company as the first choice supplier and “Star Jela” as the second one. With the first supplier it is planned to sign at least a 5 year contract in order to ensure corresponding quantity, quality and timing of the delivery. Since both of potential suppliers have their own trucks, it is expected that they will transfer the wood chips to the storage of heating plant. In the second phase of their development plan is expected that heating plant will buy a mobile chipper and trucks. It is also expected that socially endangered inhabitants will be engaged in the process of collecting wood residues and production of wood chips.

The official of Priboj municipality thinks that from the standpoint of Priboj municipality, regarding the experience with the national legislation the municipality will need help for realization of this project. That is why they expect help of the competent Ministry regarding solving legal issues and help for consulting.

The municipal management has given positive appraisal for law of planning and construction. Identified problem is an open question regarding the privatization of FAP. This company has debt of 1 billion and 200 million RSD. Government of the Republic of Serbia has 88% ownership of this company. The solution of the problem should be made between municipality and Ministry of Mining and Energy and Government (because of the environmental issues).

For market development, municipality authorities named the problem regarding the public procurement conditions. In order to resolve of this issue they need at least 1-2 people who will train district heating plant employers, until it becomes a routine job activity. Other problem could be paper work, because public procurement procedure for construction will take 2-3 months (including complaints, if there are any).

Cluster of several municipalities (Priboj, Prijepolje, Nova Varoš, Ivanjica, Bajina Bašta) could be made in order to make common market and to define the price for all municipalities. In case the plant in Priboj start next heating season with wood chips (as they hope), all other municipalities will probably follow their example. Currently, “Star Jela“ could supply 5-7,000 m3 at 15 EUR/m3.

Their goal is to start with heating by biomass-fired boiler during 2015. The losses of DHP have to be subsidized. One of the positive issues is decrease of the wood chips price. Priboj municipality is willing to take credit (maybe from KfW with 4 years of grace period and they be willing to repay it even earlier, if possible). The investments in chipper machinery and reconstruction of pipelines and the heat exchangers are also to be taken into consideration. A long-term goal is to decrease the price of district heating and by this way to attract even those who are not connected to DHP system, and to construct more pipeline network (some 800m), to help the municipality to make own energy independence.

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The owner suggests that all of the details during the contracting process should be checked in advance whether they fit into the Law of public of procurement, and only after everything is clear the transport should be done.

Company’s kiosk is still located at custom, because of the organizational problem at customs. They have the problem of phytopathological inspector at border crossing Uvac and Jabuka. That is why the process can last up to 10 days. It will be enough to have a man covering 3 border crossings (Uvac, Jabuka and Gostun), which are at the distances of 8-10 km. The problem is solved at border crossing Mokra Gora, where they have an inspector.

Public-private partnership has not been defined yet. He is aware of existing plans for DHP Priboj and he is interested to be involved. There is a problem that contracts with PC “Srbijašume” are up to 1 year long. Qualitative and obligatory contracts between the suppliers and companies are important. His company is interested in different types of crediting lines. He suggests that residue wood should be stimulated by government, by the principle “if you clean it, we will pay you”. The reorganization of public utilities is needed. It should be allowed to the people to be engaged in collecting of forest residues. Without high- quality contracts with “Srbijašume” there will be no success.

Skidding after sanitary harvesting is too expensive. The people should be allowed to harvest for these purposes by themselves without payment, but with control. Because of the price, this forest residue is left in the forest and it moulders and becomes insects litter. Since maintenance is obligatory, if the price becomes competitive, it will be cleaned. If the people could earn, they will clean.

It is also important that this job and a system to be introduced depend on a man. It is important that system is functioning well and that everybody in the chain has some benefits and that some penalties exist for those not fulfilling their obligations to help the system to become independent on man’s will, but with defined obligations for companies without meaning who is ruling and who likes who. Private companies will do this better than public utility companies, but there will be a problem if each year a new public call will be declared. These contracts should last at least 5 years and after 3.5-4 years the new contracts should be made. The Public Procurement office should be asked about their opinion about Law of public procurement.

 FE “Prijepolje”

FE “Prijepolje” consists of 3 FA offices: FA “Priboj”, FA “Nova Varoš” and FA “Prijepolje”. The representative of FE stated that all of the administrative procedures could take shorter and paperwork could be simpler (e.g. when suppliers answer to a public call, they need the proofs from the Serbian Business Registry Agency that they did not have forbiddance of commerce activity, and it takes 10-15 days to get these papers.

8.2 MUNICIPALITY NOVI PAZAR

The interviewed authorities of Novi Pazar municipality gave their experience and meaning regarding the national legislation: There is a problem of public-private partnership, because nobody is brave enough to start with this. There is no example in Serbia that public-private partnership in district heating sector was successfully conducted. It is probably that the payment will become, probably, better, the care about heat substations will be improved, as well as about the rest of heating system.

Legal obstacles are identified mostly in unsolved property rights. Duration of contracts could also be a problem; since there is a need for contracts longer than 3 years. Shorter contracting period of 1 year (as it is current praxis) is not an adequate option for the wood chips suppliers at the existing price of 30-40

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš EUR/bulk m3 or even higher. The supply with pellets would be much easier from the legal standpoint (pay and go), but the price will be much higher (150-200 EUR/m3).

There is an interest on joint venture both with other municipalities and with private partners. There is a problem of lacking some existing examples of successful public-private partnerships in energy field.

Organizational problems are that there is not enough technical staff in district heating plant in Novi Pazar due to Ministry of Finance asked for reduction of 6% according to the number of employees in 2013. Company needs additional training of the staff, and when the biomass supply starts, an employment of a few (1-2) more engineers (or at least a good engineer and a specialized economist for this kind of supply) will be necessary. There is no problem with total number of the employees; they just need new knowledge to be able to deal with the new situation after the introduction of biomass-fired boiler. There is an obligation accepted from KfW to start collecting payment according to heat consumption, and that is why they introduce heating meters.

Market barriers for fuel switch is shortage of company selling wood chips in Novi Pazar, but if 10 MW is to be produced by biomass in DHP in Novi Pazar, there will be enough biomass potentials for this.

Just few smaller trucks operate for existing heating plant. Smaller heating plants already working on coal will not be changed, only heating plant “Centralna”. The second option will be much better and without transportation problems if to be chosen location of Holding “Raška“.

Based on the interview with the Municipality authorities following statement is made: Because there are no so big heating needs, the credit will not be able to become quickly repayable. E.g. KfW credit with 2.25%, plus 0.25% on not taken means, and 0.5% at the beginning, plus paying of technical documentation done by their experts will be probably around 200,000 EUR and even more. Also the procedures take long time.

Both management of the city and DHP are aware of advantages of biomass introduction in the DHP production process. The price of heating will be decreased even 20-30%. It is important to emphasize it since there was a long-lasting trend of price increasing of HFO and they believe that it will not become cheaper. The forests are there at the territory of municipality and they expect that some 40-50 new jobs for local citizens will be opened (harvesting, timber skimming and hauling from the forest, collecting and transport). They are aware of example of Bosanska Gradiška, where the price of 50 EUR/t (to DHP) is enough to be profitable for the company and it is nearly 4 times cheaper than the price of HFO (less than 4 times, because of the workers’ wages and electricity costs).

There are several possible suppliers-transporters of wood biomass in Novi Pazar. These are: “Hrast”, “Jelič“, “Jaguar“, “Lipa“, and “Javor“. Although the biggest of these (“Hrast“ and “Jelič“) currently sell up to 2,000 bulk m³, and the others less than, together they could provide 7-8,000 m³ (around 10,000 bcm) per year for the initially estimated wood chips biomass boiler of DHP. By their coordination, could be bought a chipper machinery of 400,000 EUR. Tractors with chipping devices are cheaper (10-15,000 EUR), but they are not as economically feasible as the chipper is.

In Novi Pazar, according to the statement of manager of FA “Novi Pazar“ there are only 1-2 ha to be bring back to the church, but some 10-15% of the forests have some proprietary issues. According to Forest Law, Article 8, the forests of the owners are the forests owned by a natural person or legal entity (an economic society, church, cooperative, religious community, or a society).

 “Hrast” Ltd. Novi Pazar

Since 2002 to 2012, “Hrast” was one of the biggest customers of FA “Novi Pazar”. Since 2013 the suppliers are mostly private forest owners, because of some issues with FA. The law is not always obeyed during the public procurement.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš He is willing to enter the wood chips business, even to enter into some kind of common job with other local companies similar to his, but with longer contracts (several years) plus appropriate bylaws proposing the obligations of PC “Srbijašume” obligations to supply the city through the working performers. Finally, the price could be lower for the final customers, if there would be no need to calculate the corruption costs in the price.

 FE “Šumarstvo“ Raška, FA “Novi Pazar“

The manager of FA “Novi Pazar” office believes that General Direction of PC “Srbijašume” should react faster, to be more flexible, not to leave until the end of a season. Since the organizational levels of “Srbijašume” as a FA needs to protect the forest at maximum level, more specific rights should be allocated to FA offices.

8.3 MUNICIPALITY BAJINA BAŠTA

 DHP and municipality

The municipality of Bajina Bašta has given opinion from their point of view regarding the experience regarding to the national legislation needs help for realization of this project and they expect help of the competent Ministry regarding solving legal issues and help for consulting.

There is an interest in public private partnership. One company from Bosnia and Herzegovina was interested to invest and company from Slovenia with 30% Slovenian government grants. There is a problem of understanding PPP law, lacking of existing examples of successful public-private partnerships in energy field in Serbia. Also, in PPP can be problem debit of PC “BB Term”.

Municipality and DHP management are not considered possibility of investment in and use infrastructure jointly with other municipalities in order to reduce investment cost. Bajina Bašta municipality doesn’t border with any of the considered municipalities in the study.

Later, in second phase, it is expected that DHP or municipality new established enterprise take part in wood chips production. In that case organizational problem is expected.

Duration of contracts with wood chips supplier is mentioned as important issue, there is a need for long term contracts (longer than 7 years).

Problem with biomass market aren’t expected as Bajina Bašta has lot of company for wood processing. Some of that company surly will be taking a part in wood chips production. As well as for transportation purpose the third company will be engaged. River Drina is a great advantage in transportation and market field. The goal is to start at 2015.

 Wood chip supplier

Duration of contract with raw material owner is one year every fiscal year in case of state forest (PC “National Park Tara”) and formal agreements (no signed contract) with private forest. If possibility for long term contract, it can provide safety and stability of business.

Any organizational problems are not noticed, but it will be useful for potential wood chip supplier to see an example of good practice (visit of similar concept in neighbouring countries).

Interviewed potential wood chips supplier are interested in possibility of loans to purchase wood chip machinery, trucks… through the KfW credit lines.

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Potential problem could be stability and timing of the payment by the heating plant to the supplied of wood chips. Some kind of warranty has to be included in the contracts.

8.4 MUNICIPALITY NOVA VAROŠ

 DHP and municipality

Experience of municipality Nova Varoš regarding to the national legislation is good and their legal sector deals with these issues.

Evaluate obstacles in Nova Varoš consist mostly about regulation of PPP investment opportunity, which they think is unclear. Municipality considered PPP possibility but due to low level of payment of the sold heat (50% in 2014, usually 80%) no interested party.

It should not be a legal obstacle to buy wood chips from the contracted supplier selected by a public tender.

In the second phase, it is expected that heating plant buy a mobile chipper and trucks and to engage socially endangered inhabitants in the processes of collecting wood residues and production of wood chips.

Organizationally maybe selection of a new biomass boiler technology can be a problem (new software and regulation, new fuel…). It is solvable by seminars, additional trainings…

For the purpose of transporting conducted by the third company is planned. During strong winter transport could be a problem.

Municipality and DHP management plan to start project as soon as possible and the most important limitation of this idea is the finance. They opinion are that KfW credit line is very good but takes a long time to be conducted.

8.5 COMPANIES OUTSIDE ANALYZED MUNICIPALITIES

 Wood chip supplier - “Star Jela”, Prijepolje

One year contract is conducted with raw material supplier and with the customers. The company manager are mentioned complicate procedure for obtaining work permits, several different licences for treatment, storage, transport are necessary.

The company has problems with the complaints of inhabitants because of noise and work in industrial zone during daily working hours. Some problems are arising when importing sawmills residues from Montenegro, because custom requires radiological examinations for the logged wood and for the chucks it is not requested.

PC “Srbijašume“ increased prices of the raw material. Company “Star Jela” is of the opinion that PC “Srbijašume“ have inadequate roads and their classification is inappropriate. For example long cellulosic wood from soft or hard broadleaved-they classify hollow beech as I class, and it should be II or even III class. They also give meter long wood, instead of long. By conversion coefficients from 1 bulk m3 to 1 m3 they can steal 0.5 at each m3! The Company “Star Jela” is convinced that wood chips markets in Serbia is not developed; there are lacks of biomass customers.

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9. ENVIRONMENTAL AND SOCIAL IMPACT

9.1 ENVIRONMENTAL IMPACT

The utilization of forest and wood waste must be conducted in a way that does not have an environmental impact on life in forests and does not lead to deforestation. In Republic of Serbia two public companies; “Srbijašume” and “Vojvodinašume” are responsible for the sustainable use of private and state-owned forests. A sustainable way of forest utilization means that the forest area and the volume of trees must not be decreased in the long term and the forest soil must not undergo degradation by the depletion of minerals and nitrogen. Trees and animal species must be preserved, and animals be provided with secure new settlements prior to new clear-cutting of forests.

It is very important to maintain and protect the biodiversity in forests when it comes to wood wastes utilization. The utilization of biomass for energy production is treated as CO2 neutral, based on the fact that plants capture CO2 during its growth through the process of photosynthesis. Combustion of biomass releases also some quantity of CO2 but it is already captured in the plant. If the use of forests is carried out in a sustainable way then all the CO2 released during combustion of biomass would be captured during the growth of the next generation plant.

Beside the CO2 emission reduction, the use of biomass as an energy source has other positive environmental effects. When we compare contents of ash in biomass and coal, it is obvious that the replacement of coal fired boiler with biomass in the combustion process would decrease quantity of ash by several times. In municipalities with heating plants located near living areas this benefit will have significant impact on air quality.

Taking into account that ash contains toxic metals, and that ash from one plant is usually deposited on a selected site, means that the soil is very much polluted. Decreasing the volume of ash will help these municipalities to be less endangered. Comparing the sulphur content of biomass on one hand and coal and liquid fuel on the other hand use of wood biomass would lead to reduction of SO2 emission. SO2 is responsible for formation of so-called acid rains, which is harmful to forests, causing leaves and needles to drop off, and other forest damage.

Ash generated after combustion of woody biomass should be prepared afterwards in granules and be returned to the forest soil, because of nitrogen content. Nitrogen is very important for the growth of trees, neither the lack nor an excess of nitrogen in soil is good for forests. It is important to maintain the balance of nitrogen as well as other minerals in forest soil. Fuel type CO2 emission kg/kWh Natural gas 0.199 Heavy fuel oil 0.27 Coal average 0.38 Cleaved wood 0.02 Wood pellet 0.03 Wood chips 0.03 Briquettes 0.03

Table 9.1: Emission of CO2 when burning different types of fuel [7]

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš Next table presents possible reduction of CO2 on annual level if all municipalities switch fuel to woody biomass.

Municipality Consumption of HFO t/a Consumption of coal t/a Annual reduction of tCO2 Priboj 1,810 - 5,526 Novi Pazar 961 - 3,434 Bajina Bašta 1,056 1,110 5,520 Nova Varoš 318 - 976

Table 9.2 Possible annual reduction of CO2 in tones

9.2 SOCIAL ISSUES

Social benefits of using biomass in energy purposes in Serbia are multiple and diverse. Has own energy economic, environmental ecological, social, regional, local, global and development dimension.

There is no doubt that intensified usage of biomass for energy purposes will contribute to the reduction of the share of fossil fuels in the national energy balance. This directly affects the release of part of the funds for the purchase of fossil fuels and to use them for other purposes.

The regions with the largest area of forests in Serbia are some of the poorest ones. The municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš are also in this situation (see 4.1). Sustainable and more intensive utilization of forests and wood residues in these areas would lead to an increase in employment of local people.

Since the bulk density of forest and wood residues are rather low, it is not economically viable to transport residues long distances, and therefore new enterprises would be established. For example industry of wood processing, wood pellet and wood chip production companies as well as district heating companies on woody biomass would operate more feasible if they are closer to the production of woody biomass. If wood waste including residues of forest cutting utilization was developed, and it is financially attractive, forest owners and managers would try to increase the forest area that would be used as a resource. Therefore, it is necessary to improve the existing forest infrastructure and develop new forest infrastructure. This will enable forest managers and staff to reach all forest areas and to act if necessary for the protection of forests against disease and fires. It will open new business opportunity in breeding energy crops and fast growing woody biomass types.

In previous section environmental aspect of use of woody biomass is analysed. We can conclude increased ecological, environmental and biodiversity benefits when biomass is used in energy sector. Analysed municipalities as well as Serbia will achieve lower CO2 emissions when instead of coal and heavy fuel oil district heating plants would use wood chips.

The market development will require long-term contracts between suppliers and consumers of woody biomass with guaranteed purchase volumes and security of energy supply. The revenues for forest owner will be increased. This should have positive impact on regional municipality development.

Related social issues are also municipality, as well as community cohesion. In this project it is possible to develop business interaction between analysed municipalities and strengthening relations among public enterprises. Rural development is crucial factor, especially because this involves very poor municipalities. Waste avoidance and care also needs to be highlighted. The public image of district heating plants, community and municipalities will be emphasized when they switch to biomass usage.

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10. CONCLUSIONS

During this study one of the goals was to gather information about the current field situation about woody biomass in 4 municipalities (Priboj, Novi Pazar, Bajina Bašta and Nova Varoš).

After field visits to the stakeholders in woody biomass supply chain in these municipalities, literature review, as well as the analysis of collected and calculated data, several things raised as the conclusions.

Estimated quantity of biomass from the territory of local forest administration offices available to be used for the analysed parts of district heating system (or in some cases whole district heating system) is enough for the current needs of these municipalities. There are even more potential reserves on available woody biomass if to take into account surrounding areas from forest administration offices in neighbouring municipalities.

General models of woody biomass supply chains are made according to the statements of interviewed officials and authorities of the municipalities, district heating plants, forest administration offices, forest estates, wood chip producers and other wood production companies, and according to the situation observed on-site.

Possibility of integrated model of biomass supply chain is considered. Generally, municipality authorities are not taking in consideration or they are not interested in clustering at this moment. As a basis for further municipality clustering in a field of biomass utilisation one integrated model is designed. Here is assumed clustering of municipalities Nova Varoš and Priboj.

Taking into account costs obtained from the surveys and literature, the rough estimation of total costs for each of the models made for the municipalities is made. The comparison of these costs, as well as other influencing factors (legal framework, possible period of project implementation as well as opinions and plans of the authorities of municipalities) led to a decision that currently different variations of general Model 1 for each of the analyzed municipalities are the most suitable. However, because of several still existing issues (e.g. issues of unresolved proprietary issues on land and the buildings in the municipalities), and according to the fact that models of PPP are still unknown to the energy companies in Serbia, there is a chance that in the future, some of other models could become also applicable. Currently, these suggested models are the most realistic to be applied.

It is emphasized, that not only technical issues, but also environmental and social are also important and their impact in these municipalities cannot be neglected.

The suggestions for several types of contracts are given, as well as legal and other obstacles noted by the stakeholders of woody biomass supply chain.

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11. REFERENCES

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[16] Partnership for success - A guide to partnership working in the biomass heating supply chain, supported by Intelligent Energy Europe

[17] “Biomass Energy for Heating and Hot Water Supply in Belarus. The Forest Woodchip Market in Austria, John Vos, prepared for UNDP/GEF, 2006

[18] “Contract for the supply of wood chips to Ensted Power Station, DONG energy, Denmark, 2011

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[20] Aguilar FX (ed.) Wood Energy in Developed Economices: Resource Management, Economics, and Policy, 2014

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DKTI (GIZ) Programme "Development of sustainable bioenergy market in Serbia" Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš [21] Goerndt ME, Aguilar FX, Skog K, Resource potential for renewable energy generation from co-firing of woody biomass with coal in the northern US, Biomass and Bioenergy, 2013, Vol. 59, pp. 348-361

[22] Yoshioka T, Aruga T, Sakai H, Kobayashi H, and Nitami T, Cost, energy and carbon dioxide (CO2) effectiveness of a harvesting and transporting system for residual forest biomass, Journal of Forest Research, 2002, 7, pp. 157-163

[23] Yoshioka T, Aruga K, Nitami T, Sakai H, and Kobayashi H, A case study on the costs and the fuel consumption of harvesting, transporting, and chipping chains for logging residues in Japan, Biomass and Bioenergy, 2006, 30, pp. 342-348

[24] http://www.priboj.rs/sr/vesti-lat/24-vesti-lat/1563-odrzana-55-sednica-opstinskog-veca (accessed January 2015)

[25] Informator o radu Javnog preduzeća za gazdovanje šumama “Srbijašume“ sa p.o. Beograd, 2006

[26] Načini i prednosti udruživanja privatnih šumovlasnika, Priručnik za uspešno udruživanje, Ministarstvo poljoprivrede, šumarstva i vodoprivrede, Uprava za šume

[27] Options for the Organization of Small Forest Owners in Central and Eastern Europe for Sustainable Forest Management

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