Elaboration of Technical Project Concept of the fuel switch to biomass of selected public buildings in Priboj including economical evaluation

Transcription

1 Elaboration of Technical Project Concept of the fuel switch to biomass of selected public buildings in Priboj including economical evaluation Prepared for: Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Dag-Hammerskjöld Weg 1-5 Postfach/ P.O.Box Eschborn prepared by: Marko Milošević 31 th October 2016

2 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY INTRODUCTION GENERAL INFORMATION PRIBOJ MUNICIPALITY TOWN PRIBOJ EXISTING HEATING SYSTEM BIOMASS MARKET ANALYSES TECHNICAL DESIGN CONCEPT TECHNICAL SOLUTIONS AND UNIT COST OF FUEL-ENERGY BOILER ROOMS, LOCATION AND FACILITIES PRELIMINARY COST ESTIMATES PRELIMINARY COST ESTIMATES, SCENARIO PRELIMINARY COST ESTIMATES, SCENARIO PRELIMINARY COST ESTIMATES, SCENARIO PRELIMINARY FINANCIAL ANALYSE PRELIMINARY FINANCIAL ANALYSE, SCENARIO PRELIMINARY FINANCIAL ANALYSE, SCENARIO PRELIMINARY FINANCIAL ANALYSE, SCENARIO PROJECT EVALUATION INSTITUTIONAL ANALYSES ENVIRONMENTAL IMPACTS ENERGY EFFICIENCY MEASURES AND CONCLUSION List of tables 2

3 Table 1 - The structure of the territory of Priboj municipality, (Source: 13 Table 2 - From 1961 to 2011 Population Census data for municipality Priboj, (Source: 14 Table 3 - From 1961 to 2011 Population Census data for town Priboj, (Source: 15 Table 4 - Microclimate data (Source: RetScreen International & NASA Software, updated 2014.).. 15 Table 5 - Facilities data (Source: data collected from the location).. 16 Table 6 - Overview of Data and consumption of facilities, (Source: Own calculations). 23 Table 7 - Current situation, Energy and fuel consumption, price, CO2 emission.. 24 Table 8 - Requirements for wood chips according to ÖNORM M Table 9 - The classification of wood chips based on the moisture content according to ÖNORM M Table 10 - Requirements for wood chips according to CEN/TS 14961:2005, Part 4 26 Table 11 - Capacity data of forest farm Priboj, public company Srbija Šume, (Source: 26 Table 12 - Available biomass in municipal Zlatibor district, expressed through the energy value 28 Table 13 - Characteristics of wood chips depending on the type of primary wood Table 14 - Characteristics of wood pellet depending on the type of primary wood Table 15 - Requirements for wood pellet according to ÖNORM M 7135, (Source: 29 Table 16 - Overview of Data and consumption of facilities according to the scenario.. 30 Table 17 - Unit price of wood chips and wood pellet. 31 Table 18 - Comparative analysis of the cost of existing fuel and biomass, (Source: Own calculations) 31 Table 19 - Calculate capacity of heating boilers for Scenario Table 20 - Calculate capacity of heating boilers for Scenario Table 21 - Boiler rooms surface according to Scenario Table 22 - Investment costs for scenario 1 (Source: Own calculations). 38 Table 23 - Operational costs for scenario 1 (Source: Own calculations) 39 Table 24 - Investment costs for scenario 2 (Source: Own calculations). 39 Table 25 - Operational costs for scenario 2 (Source: Own calculations) 40 Table 26 - Investment costs for scenario 2.1 (Source: Own calculations). 40 Table 27 - Operational costs for scenario 2.1 (Source: Own calculations) 41 Table 28 - Costs of energy production, scenario 1; (Source: Own Calculations). 42 Table 29 - Costs of energy production, scenario 2; (Source: Own Calculations). 43 Table 30 - Costs of energy production, scenario 2.1; (Source: Own Calculations).. 44 Table 31 - Unit cost heat energy (Source: Own calculations).. 45 Table 32 - Specification of the investment costs for kindergarten, solution

4 List of figures Figure 1 - Location of the Zlatibor District in the territory of the Republic of Serbia (Source: 12 Figure 2 - Municipalities belonging to the Zlatibor district, (Source: 12 Figure 3 - Situation plan (Source: data collected from the location) 17 Figure 4 - Forest s area in the total area of municipalities (Source: Statistical yearbook of Republic of Serbia 2012).. 27 Figure 5 - State and private forest s by ratio by administrative districts (Source: Statistical yearbook of Republic of Serbia 2012). 27 Figure 6 - Annual energy cost by scenario-fuel 31 Figure 7 - Unit price of energy by scenario.. 32 Figure 8 - Diagram of the annual distribution heat capacity from boilers, scenario 1 33 Figure 9 - Plan of new boiler roos and pre-insulated pipes, scenario 1 36 Figure 10 - Emission CO2 Comparison to fuel 50 Figure 11 - Comparative analysis of cost heat energy and saving, scenario Figure 12 - Saving from fuel switch, scenario Figure 13 - Operational costs and depreciation, scenario Figure 14 - Cash flow balance, scenario Figure 15 - Comparative analysis of cost heat energy and saving, scenario Figure 16 - Cash flow balance, scenario Figure 17 - Comparative analysis of cost heat energy and saving, scenario Figure 18 - Cash flow balance, scenario

5 List of pictures Picture 1 - Technical school Priboj. 18 Picture 2 - Primary school Desanka Maksimović.. 18 Picture 3 - Tubular heat exchanger Picture 4 - Manifold with more connections.. 18 Picture 5 - School Vuk Karadžić, street view. 19 Picture 6 - School Vuk Karadžić, yard view 19 Picture 7 - Former boiler room with three substations 19 Picture 8 - Manifold with more connections for school Vuk Karadžić. 19 Picture 9 - High school, view Nemanjina street 20 Picture 10 - High school, view Vuk Karadžić street 20 Picture 11 - Substation for high school Priboj 20 Picture 12 - Tubular heat exchanger for high school Priboj 20 Picture 13 - Ambulance health center.. 21 Picture 14 - Ambulance and residential building, street view 21 Picture 15 - Ambulance and residential building, yard view. 21 Picture 16 - Substation for Ambulance health center and residential building at address Limska Picture 17 - Kindergarten Neven, street view. 22 Picture 18 - Entrance for employees from backyard 22 Picture 19 - Manifold with more connections for kindergarten Neven 22 Picture 20 - Plant heat exchanger in kindergarten Neven 22 Picture 21 - Planned location of boiler room. 35 5

6 List of abbreviations EUR - Euro (currency) CO2 - Carbon Monoxide RS - Republic of Serbia CAPEX - Capital Expenditure OPEX - Operating Expenditure LUC - Leveled Unit Costs (F)IRR - (Financial) Internal Rate of Return (E)IRR - Economy Internal Rate of Return (F)NPV - (Financial) Net Present Value (E)NV - (Economy) Net Present Value 6

7 District heating by heavy oil No 1. EXECUTIVE SUMMARY The assignment of the study is elaboration of technical concept for central woodchip heating system including boiler, feeding system, storage unit for: - Mechanical and electrical technical school Priboj - Primary school "Desanka Maksimović" - Primary school "Vuk Karadžić" - High school Priboj - Health center ambulance Priboj - Kindergarten "Neven" Objects that are the subject of these study have radiator heating systems with temperature regime of 80 / 60C and they are supplied by thermal energy through the existing district heating system. Objects from study are connect to the district heating system over five substations with heat exchangers. In addition to objects that are defined in the study, during data collection, it was found that the heating system of residential building with more apartments at address Limska 20 is unique with the heating system of the health center. Overview of facilities data and heating systems: Institution Mechanical and electrical technical school Priboj Primary school "Desanka Maksimović" Primary school "Vuk Karadžić" High school Priboj Health center ambulance Priboj Residential building Address Existing heating SCENARIO 1 SCENARIO 2 Building Substation system Vuka Karadžića 27 Limska 24 Nemanjina 35 Nemanjina 37 Limska 18 Limska 20 Vuka Karadžića 27 Nemanjina 35 Nemanjina 35 Nemanjina 35 Wood chips 800kW+1200kW Wood pellet 2x350kW Wood pellet 250kW Wood pellet 2x350kW Wood pellet 350kW Wood pellet 100kW Wood pellet 40kW A Q m 2 kw Kindergarten "Neven" Pionirska 2 Pionirska 2 Wood pellet 200kW Wood pellet boiler 200kW Summary

8 In order to reduce costs of heating energy needed for the buildings from the study, it is necessary to perform a switch in energy source to biomass fuel. For the purpose of elaborating the best solutions according to the criterion of investment and exploitation costs, the task of this study is the creation of three scenarios replacing fuels with biomass: - Scenario 1 - All buildings from the study will be connected to the new woodchip boiler. - Scenario 2 - All buildings will have separate pellet boilers. - Scenario All buildings will have separate woodchip boilers The choice of the technical concept that would be the most advantageous and analysis of investment justification, is based at two scenarios. Scenario 1 - After analysis, solution has been found that changes the scenario 1 and it is slightly different from the originally planned. All buildings from the study, except the kindergarten, will be connected to the new wood chips boiler. Separate pellet boiler is planned for the building of kindergarten. This solution require less investment for less then the solution with construction of hot-water pre-insulated pipes, with the length of more than 250m. Solution to connect building of kindergarten to central wood chips boiler with pre-insulated pipes, is not the best technical solution. Such a solution would lead to delays delivery of heat energy to kindergarten. The option where kindergarten building is attached to a central boiler room would cause a delay in warming the kindergarten because of its distance from other facilities and transport of heat through hot water pipes. The reason for this is the large distance of kindergarten from other connected facilities and transport of hot water through long pre-insulated pipes. Bearing in mind that several objects are connected to one substation, observation data will be carried out in relation to the substation, which is the starting point and the place of delivery of thermal energy in buildings. From the central boiler two pipelines have been planned. One pipeline for heating substations in the technical school Priboj and second for the substations in the primary school Vuk Karadžić have been planned. Heat substation of district heating systems are planned to remain in reserve in case there is a problem with the supply of biomass. For a central boiler room two woodchip boilers with power of 800kW and 1200kW have been planned and for kindergarten boiler wood pellet boiler with the power of 200kW. Scenario 1 presents that in the period of 8 years of the start of exploitation there will be an opportunity for positive business. The advantage of this scenario is that the municipality will have formed a sustainable heating system, which increases the quality of life and creates a positive effect on the environment. Taking into account that the additional costs of heating plants and heating system from scenario 1 are approximately the same, we can conclude that technical solution according to scenario 1 proceeds fast return on invested funds. Scenario 2 - All buildings will have separate pellet boilers. Scenario 2 shows that there will not be opportunities for positive business results. This is due to high investment costs and high maintenance costs seven of separate boiler rooms. Larger number of boilers with complex systems for combustion, required hiring more labor. Scenario All buildings will have separate wood chips boilers. Scenario 2.1 shows predicts very small opportunities for positive business results. This is due to high investment costs and 8

9 high maintenance costs for construction of seven separate boiler rooms. Larger number of boilers with complex systems for combustion requires hiring more labor force. Prerequisites that must be met for the successful operation of the facility are as follows: Selection of an appropriate financing model (from own funds, line of credit or public-private partnership); Entering into long-term contracts for the supply of the biomass; Providing autonomy to the fuel storage according to the consumption in the coldest month of the year; During the construction phase training of the personnel who would take over the management and maintenance of the boiler plant will also be required; Ensuring high quality maintenance of the specific equipment in cooperation with the supplier of the equipment. This investment will achieve the following benefits: - Lower costs of heat energy, - Low levels of emission of harmful substances in the exhaust gas, - Reduction of CO2 emissions - burning wood biomass the CO2 released is "neutral", - Raising the level of safety and operational availability of the energy block, Techno-economic indicators of the future energy system with wood chips are as follows: Heat capacity of boilers Woodchips boiler Wood pellet boiler Fuel kw 200 kw Woodchips M30 according to CEN/TS 14961:2005, (1) General requirements and (4) Wood pellet DIN or Ö-Norm M-7135 Annual production of thermal energy MWhth /a Annual fuel consumption Woodchips Wood pellet 1077 t/a 53 t/a Efficiency on the threshold of the heat plant 0,90 x 0,94 Annual reduction in CO2 emission 677,39 t/a CAPEX OPEX (the amortization period) LUC 39,70 EUR/MWh 9

10 2. INTRODUCTION The program Development of a Sustainable Bioenergy Market in Serbia (GIZ DKTI) is implemented jointly by the KfW (financing component) and GIZ (technical assistance component). It is funded by the German Federal Ministry for Economic Cooperation and Development (BMZ) under the German Climate Technology Initiative (DKTI). The main implementing partner and beneficiary of the technical assistance (TA) component is the Serbian Ministry of Agriculture, Forestry and Water Management (MAFWM). The general objective of the project is to strengthen capacities and create an enabling environment for the sustainable use of bioenergy in Serbia. The TA component includes the following five activity areas: 1) Policy advice: Assessment of bioenergy potentials and regulatory framework for creating and enabling environment for private sector investment in bioenergy projects etc. 2) Biomass supply: Accompany investments in biomass-fired district heating plants in up to three pilot regions with TA to secure a reliable and cost-effective supply of biomass in a sustainable manner. 3) Efficient firewood utilization at household level: Increase the efficiency of firewood consumption for heating at household level through the promotion of firewood drying and efficient stoves/ovens. 4) Project development: Support in cooperation with the national and international private sector the development and the implementation of feasible bioenergy projects from biogas or straw combustion plants in the industry sector to wood based heating boilers in private and public buildings. 5) EU-Project BioRES Regional Supply Chains for Woody Bioenergy: BioRES aims at introducing the innovative concept of Biomass Logistic and Trade Centers (BLTCs) in Serbia, Croatia, and Bulgaria based on cooperation with technology leaders from Austria, Slovenia, Germany, and Finland. The BLTCs as regional hubs will help increasing local supply and demand for wood bioenergy products in these countries. 6) The development of a biomass supply is required only if there are liable regional consumers of biomass. In the future, as a regional consumer of biomass, the municipality of Priboj decided to switch to biomass in stages. As a supporting institution, GIZ DKTI has received a Letter of Expression of Interest from municipality Priboj to declare their demand for guidance, legal and technical assistance in the process of the development of a fuel switch of public buildings in Priboj to biomass. It is planned that in the first stage perform switching of selected public buildings, is the point of interest for this assignment. The objective of the assignment is also to establish a technical concept for fuel switch to biomass heating, the installation of a wood chip heating plant including storage for centrally heating of 4 schools, kindergarten and health center ambulance in Priboj. 10

11 This fuel switch, with disconnect from existing district heating system on heavy oil and construction the new local heating system on biomass, should provide savings in the budget of the municipality by strengthening local incomes with local produced wood fuel and should also reduce emissions of the renewed heating system. The aim of this study is to establish technical concept for switching to biomass heating, the installation of a wood chip heating plant including storage recipient and design of the distribution system including grid and substations. In addition, it is necessary to estimate the investment costs of the plant, distribution system, perform Financial evaluation of savings from woodchip heating system (compared to current situation) regarding fuel costs, efficiency, investment and operation costs, cash-flow analysis through savings and sensitivity analysis regarding fuel prices, investment cost and boiler efficiency. The study includes the following: - Assessment of the current energy situation in public buildings in Priboj regarding heated area, heating substations capacity and current performance, energy consumption and cost efficiency, condition of distribution system and connections. - Techno-economic analysis of the proposed system for the production of thermal energy by burning biomass (wood chips), and distribution system with heating grid which should include: Proposal of a technical concept for central woodchip heating system including boiler, feeding system, storage unit and grid installation taking into consideration future efficiency measures in the buildings. Financial evaluation of savings from woodchip heating system (compared to current situation) regarding fuel costs, efficiency, investment and operation costs, cash-flow analysis through savings and sensitivity analysis regarding fuel prices, investment cost and boiler efficiency. An assessment of CO2 emissions reduction. The recommendation concerning the quality and availability of wood chips to supply the plant in the future, taking into account the prices and local suppliers of wood chips. Technical concept and preliminary design for heating grid in Priboj and further necessary equipment, including losses, connected to planned biomass CHP. Estimation of overall investment costs for the heating grid and further necessary equipment. Financial evaluation of heat prices compared to current situation taking into account fuel costs, efficiency, investment and operation costs. 11

12 3. GENERAL INFORMATION 3.1 PRIBOJ MUNICIPALITY Zlatibor district covers the western part of Serbia, and covers an area of 6142km 2 (Source: According to the criteria of surface Zlatibor district is the largest district in Serbia. The administrative center of the district is the city of Užice Zlatibor district includes: 1. City Užice 2. Municipality Bajna Bašta 3. Municipality Kosjerić 4. Municipality Pošega 5. Municipality Čajetina 6. Municipality Arilje 7. Municipality Priboj 8. Municipality Nova Varoš 9. Municipality Prijepolje 10. Municipality Sjenica Figure 1- Location of the Zlatibor District in the territory of the Republic of Serbia ( Figure 2 Municipalities belonging to the Zlatibor district (Source: 12

13 Priboj is located in the southwestern part of the Republic of Serbia on the border between Serbia, Montenegro, Bosnia and Herzegovina. In the north it borders with the Municipality of Čajetina (length 23 km) to the east with the municipality of Nova Varos (15.6 km), and to the southeast with the municipality of Prijepolje (28 km). In the south, municipalities Priboj has a state border with the Republic of Montenegro (Pljevlja Municipality) at a distance of 27km. In the West, Priboj municipality has the state border with the Republic of Bosnia and Herzegovina (Rudo and Čajnić municipalities), at a distance of 51 km. The total length of the border municipalities Priboj is about 145 kilometers. In administrative terms Priboj is municipal center with 14 local communities, the settlement of 33 and 24 cadastral municipalities. City Priboj is from the administrative center of the district Zlatibor city of Užice, away about 70km. Municipality of Priboj covers an area of 552km 2. From the capital city Belgrade, municipality Priboj is located 280km to the south and it is bounded from the south by mountains Pobijenik and Javorje, from the west by mountain Later. In the municipality there are river flows of rivers Lim and Uvac. Municipality Priboj is connected to the main road Belgrade-Podgorica, Višegrad-Nova Varoš and railroad Belgrade-Bar. The total area of forests and forest land in municipality Priboj is ha. The forest coverage of the municipality is 65% and it is significantly higher than the percentage of forest cover in Serbia which is 27.4%. Surface area of Fertile land ha Arable land ha Forest land ha Other ha 761 Table 1 - The structure of the territory of Priboj municipality (Source: Climate zone in the municipality of Priboj are moderately continental and mountain. This distinctive climatic diversity results from the large dissection of relief (mountain mass effect, hypsometric, slope and exposure) and regional winds. The basic meteorological data (average annual values) of Zlatibor district (Source: RetScreen International & NASA Software, updated 2014.): - Insulation: hours/month, i.e ,5 hours/year, - The amount of rainfall: 990 mm/year, - Air temperature: 7,8 C, Relative humidity: 75,8 %, - Daily solar radiation on a horizontal surface: 3,76 kwh/m2 day, - Atmospheric pressure: 93,6 kpa, - Wind speed: 2,2 m/s (measured at 10 m from the ground), - Ground temperature: 9,9 C - Degree day heating: Heating days: Average temperature during heating days: 4,4 C 13

14 The population of the municipality Priboj Number Census year of Inhabitants: Households: Table 2 From 1961 to 2011 Population Census data for municipality Priboj (Source: TOWN PRIBOJ Town Priboj is located on the river Lim and is the administrative center. Economic development of Priboj was created after World War II, when large number of factories were built. Factories established during that period were wood-industrial company "Lim", transportation company "Raketa", industry "Polyester", a construction company "Construction", synthetic resins factory "EPOXID" and Priboj car factory FAP. Industrial development has led to an increase in the number of population in the period year. New part Priboj Varoš has been built during the period of development and it contains residential, educational, health and sports facilities. The district heating system in Priboj-Varoš is connected to the heavy fuel boilers, which are positioned in the factory FAP. Plant in the factory FAP has two heavy fuel boilers with 26 and 29 MW of power. Boiler with the power of 29 MW is out of operation. In the period prior to 2012, the supply of the city with the thermal energy was conducted by the company "FAP-Stan" which was within the company FAP. The company "FAP-Stan" supplies the city with heat energy and maintenance of residential buildings. After the shutdown of the company FAP, the municipality in 2012 formed a public company "Toplana-Priboj", with the aim to take over the supply of town with heating energy from company "FAP-Stan". Based on the agreement, public company "Plant-Priboj" supplies the city with thermal energy using the resources and assets of the company "FAP-Stan". Public company "Plant Priboj" supplies thermal energy households in Priboj with 14

15 81.720m 2 heated area, and about 36,780m 2 of office space, with a total installed capacity of the district heating of kw. (Source: The population of the town Priboj Number Census year of Inhabitants: Table 3 From 1961 to 2011 Population Census data for town Priboj (Source: Microclimate data of Zlatibor district: Air temperature Relative humidity Daily insulation Atmospheric pressure Wind speed Soil temperature Degree days heating ( C) (%) (kwh/m 2 ) (kpa) (m/s) ( C) ( Cd) January -2,2 82,9 1,68 93,7 2,3-1,8 626 February -1,0 77,8 2,48 93,6 2,3-0,4 532 March 2,7 72,4 3,49 93,5 2,3 4,4 474 April 6,9 71,1 4,40 93,2 2,4 9,3 333 May 12,1 71,2 5,29 93,4 2,1 14,8 183 June 15,6 72,8 5,79 93,5 1,9 18,8 72 July 17,8 70,9 6,00 93,5 1,8 21,6 6 August 17,7 70,0 5,42 93,5 1,8 21,5 9 September 13,0 76,6 4,22 93,6 2,0 16,2 150 October 9,1 78,1 3,04 93,8 2,1 10,6 276 November 3,3 80,7 1,88 93,7 2,4 4,2 441 December -1,5 85,3 1,39 93,7 2,5-0,8 605 Year 7,8 75,8 3,76 93,6 2,2 9, Table 4 - Microclimate data (Source: RetScreen International & NASA Software, updated 2014.) 4. EXISTING HEATING SYSTEM The assignment of the study is elaboration of technical concept for central woodchip heating system including boiler, feeding system, storage unit for 4 schools, kindergarten and health center ambulance taking into consideration future efficiency measures in the buildings. Objects that are the subject of these study are supplied by thermal energy through the existing district heating system. Objects contain heating substations with exchangers and radiator heating systems with temperature regime of 80 / 60C. During data collection, in addition to the objects that are defined in the study, it was found that 15

16 District heating by heavy oil the heating system of residential building with more flats at address Limska 20 is unique with the heating system of the health center Institution Mechanical and electrical technical school Priboj Primary school "Desanka Maksimović" Primary school "Vuk Karadžić" High school Priboj Health center ambulance Priboj Residential building Kindergarten "Neven" Building Address Heating substation Vuka Karadžića 27 Vuka Karadžića 27 Type of energy Time of Users system users heated room operat. needs area height capacity h h m 2 m kw ,2 630 Limska Nemanjina 35 Nemanjina 37 Nemanjina 35 Nemanjina , Limska 18 Nemanjina , Limska ,7 31 Pionirska 2 Pionirska ,7 168 Summary Table 5 Facilities data, (Source: data collected from the location) Bearing in mind that the more objects are connected to one substation, observation data will be carried out in relation to the substation, which is the starting point and the place of delivery of thermal energy in buildings. 16

17 Figure 3 Situation plan (Source: data collected from the location) Observation of existing heating system in Mechanical and electrical technical school Priboj and primary school Desanka Maksimović Facilities of Mechanical and electrical technical school Priboj and primary school Desanka Maksimović are connected to the district heating system via the substation located in the basement at address Vuk Karadzic 27. The substation contains tubular heat exchanger, manifold with more connections and circulation pumps. Substation is not equipped with an automatic temperature control and heat meters for measuring heat consumption. Thermostatic valves on radiators do not exist. 17

18 Picture 1 Technical school Priboj Picture 2 Primary school Desanka Maksimović Picture 3 Tubular heat excanger The valves do not close the flow of water and the thermal insulation fell off the equipment. Equipment and installations in the boiler room are in poor condition. In the basement floor there is the water of unknown origin. Rooms in the basement are not safe for work. Picture 4 Manifold with more connections 18

19 Observation of existing heating system for primary school Vuk Karadžić Facility of primary school Vuk Karadžić is connected to the district heating system via the substation located in the basement of the building at address Nemanjina 35. Inside the room where heating substation for primary school Vuk Karadžić is located, there are also heating substation for high school Priboj and unique heating substation for residential building at address Limska 20 and ambulance health center. Equipment and installations in a room with three substations are in good and functional condition. The room with three heating substations was used as boiler room for primary school Vuk Karadžić. The substation for primary school Vuk Karadžić contains two tubular heat exchangers, manifold with more connections and circulation pumps. Substation is not equipped with an automatic temperature control and heat meters for measuring heat consumption. Radiators in school Vuk Karadžić are equipped with thermostatic valves. Picture 5 School Vuk Karadžić, street view Picture 6 School Vuk Karadžić, yard view Picture 7 Former boiler room with three substations Picture 8 Manifold with more connections for school Vuk Karadžić 19

20 Observation of existing heating system for high school Priboj Facility of high school Priboj at address Nemanjina 37 is connected to the district heating system via secondary pipes and the substation located in the basement of the building at address Nemanjina 35. The substation for high school Priboj contains tubular heat exchanger, manifold with one connection and circulation pump. Substation is not equipped with an automatic temperature control and heat meters for measuring heat consumption. Radiators in high school Priboj are not equipped with thermostatic valves. Picture 9 High school, view Nemanjina street Picture 10 High school, view Vuk Karadžić street Picture 11 Substation for high school Priboj Picture 12 Tubular heat exchanger for high school Priboj 2

21 Observation of existing heating system for ambulance health center and residential building at address Limska 20 Ambulance health center building and residential building with several apartments at address Limska 20 are connected to the district heating system via unique secondary pipe system and the substation located in the basement of the building at address Nemanjina 35. The substation for health ambulance and residential building contains plant heat exchanger, manifold with one connection and circulation pump. Substation is equipped with an automatic temperature control but without heat meters for measuring heat consumption. Radiators in ambulance health center are not equipped with thermostatic valves. Picture 13 Ambulance health center Picture 14 Ambulance and residential building, street view Picture 15 Ambulance and residential building, yard view 3 Picture 16 Substation for Ambulance health center and residential building at address Limska 20

22 Observation of existing heating system for kindergarten Neven Facility of kindergarten Neven is connected to the district heating system via substation located in the substation-room of the building. The substation for kindergarten Neven contain plant heat exchanger, manifold with more connection and circulation pump. Substation is equipped with an automatic temperature control but without heat meters for measuring heat consumption. Radiators in kindergarten Neven are not equipped with thermostatic valves. Picture 17 Kindergarten Neven, street view Picture 18 Entrance for employees from backyard Picture 20-Plant heat exchanger in kindergarten Neven Picture 19 Manifold with more connections for kindergarten Neven 4

23 No Operat. days Complete Observation Based on the displayed, heating systems differ by work time and number of users. Due the substations do not equipped with calorimeters, it cannot be possible to collect data of energy consumption, so that energy consumption is calculated according to the following: H 24 QC t t i ep HDD e y H - Estimated consumption Q C - Capacity of heating installation t i - internal temperature (20 C) t ep - external project temperature (-20 C) HDD - Degree days of heating (3728) e - correction for the effect of wind and heating switch 0,9 y - correction for the effect of daily consumption profile 0,85 Based on these equations calculated values are presented in the table below: Institution Mechanical and electrical technical school Priboj Primary school "Desanka Maksimović" Primary school "Vuk Karadžić" Address Using time Building Substation from to Calculate A Q consum. h h m 2 kw kwh/a Vuka Karadžića 27 Vuka Karadžića Limska Nemanjina 35 4 High school Priboj Nemanjina 37 Nemanjina 35 Nemanjina Health center 5 Limska ambulance Priboj Nemanjina 35 6 Residential building Limska Kindergarten "Neven" Pionirska 2 Pionirska Summary Table 6 Overview of Data and consumption of facilities, (Source: Own calculations) 5

24 Current situation Unit District heating by Crude oil Consumption of energy (kwh) Emission CO2 (kg) Efficiency of system (%) 82% Consumption of fuel (t) 315 Heated area (m 2 ) Unit fuel price ( /t), ( /kwh) 410 Annual energy cost ( ) Unit price of energy ( /m 2 ) 9,50 Unit price of energy ( /MWh) 45,45 Table 7 Current situation, Energy and fuel consumption, price, CO 2 emission, (Source: Own calculations) Primary and secondary schools have limited heating during the winter holidays. On that way schools are reducing the consumption of energy for heating. The conclusion is that the presented annual energy of the facilities is 179kWh/m2, which is much greater than the recommendations of the Government of the Republic of Serbia of 140kWh/m2. Based on the energy efficiency indicators district heating system for public facilities in town Priboj is very inefficient. The energy efficiency of the heating system depends on the efficiency of the following systems: - System for the production of thermal energy - heat source - Piping systems for hot water distribution - The heating system in the buildings connected to the heating system, as well as energy efficiency of buildings. Use the heavy oil boilers in the city area, is unacceptable due to environmental pollution and high CO2 emissions. Increase in energetic, economic and environmental efficiency of heating systems in public buildings (schools, kindergarten and ambulance health center) of the city Priboj, could be achieved by forming the central boiler that will use cheaper fuel with low CO2 emissions. Using biomass as fuel instead of heavy oil will lead to higher economic efficiency and to decrease of environmental pollution. 6

25 5. BIOMASS MARKET ANALYSES Biomass represents a renewable energy source, which is defined as the organic matter of vegetable or animal origin (wood, straw, vegetable residues from agricultural production, manure, organic fraction of communal solid waste). Biomass is used in combustion processes and converted in power plants into the heat, electricity or both heat and electricity. Biomass is used for the production of liquid and gaseous fuels. Only the biomass of wood origin in the form of wood chips will be considered as a part of this study. Biomass is one of the renewable sources of energy and as such is considered to be CO2 neutral. Since biomass combustion emits exact amount of carbon dioxide as the plant binds during the process of photosynthesis during growth, in that sense coefficient of carbon dioxide emissions of biomass equals zero. However, this information is valid only when it s accompanied by a forestation, otherwise CO2 emissions should be taken into account. Biomass as fuel in modern systems used in the form of pellets and woodchips. Wood chips are intended as the biomass for combustion in boiler plants. The quality of wood chips was defined by the standard for solid fuel CEN / TS 14961: 2005 (1) General Requirements, and (4) Wood chips for non-industrial use. In addition to that, the national standards are applied too. The following table shows the requirements defined by the standards in Austria: Wood chips Standard ÖNORM M 7133 Amax = 5 cm 2 Particles size L = 12 cm (max 5% - 16 cm) Moisture W10 W50 content 50% max Bulk density < 350 kg/m3 Calorific value 2,81-3,89 kwh/kg Table 8 - Requirements for wood chips according to ÖNORM M 7133 W20 W30 W35 W40 W50 Moisture content W< 20% 20% W<30% 30% W<35% 35% W<40% 40% W<50% Table 9-The classification of wood chips based on the moisture content according to ÖNORM M

26 Dimensions (mm) The fracture> 80% by weight Fine fracture <5% Rough fracture <1% P16 3,15 P 16 mm < 1 mm >45 mm, and < 85mm P45 3,15 P 45 mm < 1 mm > 63 mm P63 3,15 mm P 63 mm < 1 mm > 100 mm P100 3,15 mm P 100 mm < 1 mm > 200 mm Moisture (%) M20 20% Dried M30 30% Suitable for storage M40 40% Limited for storage M55 55% Unsuitable for storage M60 60% Wet Ash content (%) A 0.7 0,7% A 1.5 1,5% A 3.0 3,0% A 6.0 6,0% A ,0% Table 10 Requirements for wood chips according to CEN/TS 14961:2005, Part 4 The total area of forests and forest land in municipality Priboj is ha. The forest coverage of the municipality is 65% and it is significantly higher than the percentage of forest cover in Serbia which is 27.4%. Half of the forest within the district of Zlatibor is owned by the state and the rest is privately owned. According to a public company "Srbija Šume" forest farm "Prijepolje" consists of forest administration areas Prijepolje, Nova Varoš, Priboj, with the total forest area of ha. Forest farm Forest area Total volume of wood annual growth annual return Prijepolje ha m 3 m 3 /ha m 3 Prijepolje , Nova Varoš , Priboj , Total , Table 11 Capacity data of forest farm Priboj, public company Srbija Šume, Source: 8

27 Figure 4 Forest s area in the total area of municipalities Figure 5 State and private forest s by ratio by administrative districts (Source: Statistical yearbook of Republic of Serbia 2012) On the territory of the Zlatibor District in the study "Potentials and Possibilities of Commercial Use of Wood Biomass for Energy Production and Economic Development of the Municipalities Nova Varoš, Priboj and Prijepolje", 2009, author: prof. dr Branko Glavonjić, was conducted to establish the availability of wood waste from the sawmill industry and forestry in the neighboring municipalities of Nova Varoš, Priboj and Prijepolje. Results of the study showed that the following quantities are available to meet energy needs: 9

28 Available energy value of biomass Municipalities annuity MWh/a toe/a Nova Varoš , ,9 Priboj 8.840,4 762,1 Prijepolje , ,4 Total , ,4 Table 12 - Available biomass in municipal Zlatibor district, expressed through the energy value (Source: The study "Potentials and Possibilities of Commercial Use of Wood Biomass for Energy Production and Economic Development of the Municipalities Nova Varoš, Priboj and Prijepolje", 2009., author: prof. dr Branko Glavonjić, is a publication issued by the Faculty of Forestry of the University of Belgrade, Ministry of Agriculture, Forestry and Water Management of the Republic of Serbia, Directorate of Forests and UNDP). Biomass of wood origin in the form of pellets placed on the market was not acceptable for analysis due to the high purchase price. Domestic market transactions are performed on a small scale between manufacturers and wholesale where price reaches 160 EUR/t. Depending on the time of purchase, end customers pay between 180 and 200 EUR / t. The advantage of pellets is higher bulk density, which means lower transportation costs and smaller storage for the same amount of fuel in terms of energy produced. Some of the benefits of wood chips compared to wood pellets are lower prices and a lower level of wood processing. Wood chips Moisture Energy value Bulk density Cost (%) (kwh/m 3 ) (bulk-kg/m 3 ) ( /t) Table 13 - Characteristics of wood chips depending on the type of primary wood Wood pellet Wood pellets are the most common type of pellet fuel and are generally made from compacted sawdust and related industrial wastes from the milling of lumber, manufacture of wood products and furniture, and construction. Other industrial waste sources include empty fruit bunches, palm kernel shells, coconut shells, tree tops and branches discarded during logging operations Wood pellet Moisture Energy value Bulk density Cost (%) (kwh/t) (bulk-kg/m 3 ) ( /t) Table 14 - Characteristics of wood pellet depending on the type of primary wood (Source: 10

29 Pellets conforming to the norms commonly used in Europe (DIN or Ö-Norm M-7135) have less than 10% water content, are uniform in density (higher than 1 ton per cubic meter, thus it sinks in water) (bulk density about ton per cubic meter), have good structural strength, and low dust and ash content. Pellets can be made from nearly any wood variety. The energy content of wood pellets is approximately MWh/t. High-efficiency wood pellet stoves and boilers have been developed in recent years, typically offering combustion efficiencies of over 85%. The quality of wood chips was defined by the Austrian standard Ö NORM M 7135: Wood pellet Standard Ö NORM M 7135 Diameter mm 4-10 Length mm < 5 x D Density kg / dm3 > 1.12 Water content % < 10 Abrasion % < 2.3 Ash content % < 0.5 Energy content kwh/kg >5 Table 15 - Requirements for wood pellet according to ÖNORM M 7135 (Source: The advantage of wood pellets in relation to the wood chip is increased density. Due to the higher density requires less storage space for pellets and transport is cheaper. This advantage is demonstrated in the implementation of heating systems of family and small business establishments where it is not possible to provide a large space for storing fuel. 6. TECHNICAL DESIGN CONCEPT 6.1 TECHNICAL SOLUTIONS AND UNIT COST OF FUEL-ENERGY In order to reduce costs of heating energy the buildings from the study, it is necessary to switch energy source to biomass fuel. For the purpose of elaborating the best solutions according to the criterion of investment and exploitation costs, the task of this study is the creation of two scenarios replacing fuels with biomass: - Scenario 1 - All buildings from the study will be connected to the new woodchip boiler. - Scenario 2 - All buildings will have separate boilers with woodchips or wood pellet. 11

30 No After collecting data in order to find the most optimal solution, for the purpose of this study, two scenarios were developed: - Scenario 1 - All buildings from the study, except kindergarten, will be connected to the new wood chips boiler. For the building of kindergarten, separate pellet boiler is planned to be built. This solution does not require large investment for the construction of hot-water pre-insulated pipes, with the length of more than 250m. Solution to connect building of kindergarten to central wood chips boiler with pre-insulated pipes, is not the best technical solution. Such a solution would lead to delays in delivery of heat energy to kindergarten. The option where the kindergarten would be attached to a central boiler room is also not acceptable since there would be a delay in warming of kindergarten because of its distance from other facilities and transportation of heat through hot water pipes. The reason for this is the large distance between kindergarten and other connected facilities and transportation of hot water through a long pre-insulated pipes. - Scenario 2 - All buildings will have separate boilers with woodchips or wood pellet. Mechanical and electrical 1 techical school Priboj Primary school "Desanka 2 Maksimović" Primary school "Vuk 3 Karadžić" Address Building m 2 kw kwh/a m 2 kw kwh/a m 2 kw kwh/a Vuka Karadžića Limska Nemanjina High school Priboj Nemanjina Institution Health center ambulance Priboj Limska Residental building Limska Kindregarden "Neven" Pionirska Summary SCENARIO 1 Wood chips Wood pellet A Q consum. consum. A Q SCENARIO Table 16 - Overview of Data and consumption of facilities according to the scenario, A Q consum. In order to analyze the reduction in the cost of energy, it is present a comparative analysis of the cost of energy, if the facilities, using biomass as a fuel, according to the scenarios. Caloric Moisture Biomass value Unit price (%) (kwh/t) ( /t) ( /kwh) Wood chips ,017 Wood pellet < , < ,034 Table 17 Unit price of wood chips and wood pellet 12

31 Energy produce by Liquid Wood Scenario 1 Scenario 2 Unit Crude oil Chips Pellet Chips pellet Consumption of energy (MWh) Emission CO2 (t) Efficiency of system (%) 82% 84% 84% 84% 84% Consumption of fuel (t) Heated area (m 2 ) Unit fuel price ( /t) Anual energy cost ( ) Unit price of energy ( /m 2 ) 9,73 4,28 7,06 4,53 4,22 8,16 Unit price of energy ( /MWh) 45,45 19,70 38,10 21,14 19,70 38,10 Table 18 Comparative analysis of the cost of existing fuel and biomass, (Source: Own calculations) 129,339 Annual energy cost ( ) 140, , ,000 80,000 60,000 40,000 20, ,161 56,068 Liquid Scenario 1 Scenario 2- Chips 108,398 Scenario 2- Pellet Annual energy cost ( ) Figure 6 Annual energy cost by scenario-fuel Annual costs of heavy oil for heating the buildings from the study is more than If we use scenario 1, annual fuel costs would amount to If we use scenario 2, annual fuel costs would amount to for wood chips and amount to for wood pellet. The use of biomass as a fuel significantly reduces the costs for the production of heat energy. 13

32 Unit price of energy ( /m2),( /MWh) Liquid Scenario 1 Scenario 2-Chips Scenario 2-Pellet ( /m2) ( /MWh) Figure 7 Unit price of energy by scenario The required installed capacity of the boiler according to the scenario and level of efficiency of the heating system is calculated using the formula: Q B Q C Q B (kw) Installed boiler capacity Q C (kw) Net consume (capacity) η System efficiency η = η B η C η B η C τ Boiler efficiency Efficiency of district heating system Simultaneity factor For scenario 1, the calculated heat demand would be covered by installing heating boilers of nominal heat output presented in following table: Scenario 1 Capacity - Qc ηb ηc τ Calculate - QB Sizing of the boiler (kw) (kw) (kw) Wood chips , ,9 0,95 Wood pellet 168 0, Table 19 Calculate capacity of heating boilers for Scenario 1, (Source: Own calculations) 14

33 2500 Heating Capacity (kw) - Heat Load Curve Wood chips Boiler Wood pellet Boiler Figure 8 Diagram of the annual distribution heat capacity from boilers, Scenario 1 The number of hours of boiler operation can be determined using Sochinsky formula: Q b m Qmax Q 0 Q min max m Q m Q max Q - heating capacity at the time, - time, Q - minimum heating capacity of boiler min Q max - maximum heating capacity of boiler Q m - required capacity 15

34 During winter, every heating system is subject to great fluctuations that depend on the weather and user s habits. The maximum output is only utilized very briefly during periods of very cold weather. In contrast, the boiler is operating for long intervals of time at low load. Therefore, it is important for the boiler to be operated efficiently during off-peak periods. This can be achieved in one of the following ways: 1. The biomass boiler can provide the maximum capacity, while a buffer (a hot water tank) covers short-term load fluctuations and ensures that the boiler can be operated efficiently during off-peak periods. This solution has the advantage that only one fuel is required. 2. Combination of two biomass boilers. The second boiler increases the reliability of supply (for this reason it should have a separate fuel supply system) and ensures that the heating operates efficiently, even in off-peak periods. Review of solutions offered in the analysis shows that the optimal model for central boiler room is two wood chips boilers with hot water tank. The optimal model for kindergarten is wood pellet boiler with hot water tank. Existing substations would serve as a backup in case of problems with supplying the fuel for biomass boiler. For scenario 2, the calculated heat demand would be covered by installing heating boilers of nominal heat output presented in next table: Scenario 2 Capacity - Qc ηb ηc τ Calculate - QB Sizing of the boiler (kw) (kw) (kw) Mechanical and electrical techical school Priboj Primary school "Desanka Maksimović" Primary school "Vuk Karadžić" High school Priboj 333 0,9 0,95 0, Health center ambulance Priboj Residental building Kindregarden "Neven" Table 20 Calculate capacity of heating boilers for scenario 2, (Source: Own calculations) Comparison of biomass and heavy oil is based on an average annual energy consumption of 1345 kwh / kw. This consumption predict that during the winter holidays, heating in schools is in low mode. According to this data, it is necessary to produce yearly consumption of MWh. The unit production costs of the heat energy according to the scenario 1 is up to 21,14 EUR/MWh, and the unit production costs according to the scenario 2 are up to 19,70 EUR/MWh for wood chips and up to 38,10 EUR/MWh for wood pellet. Current unit costs for buildings from the study, with heavy oil district heating system, are up to 45,45 EUR/MWh. Based on the present lowest fuel costs for thermal energy this is achieved according to the scenario 2 with wood chips as a fuel. 16

35 6.2 BOILER ROOMS, LOCATION AND FACILITIES Construction of a biomass boiler depends on the choice of scenarios and technical solutions. Scenario 1. Construction of the facility for wood chip boiler is planned. New boiler will supply all the buildings from the study with heat energy, except the kindergarten Neven. New woodchip boiler will connect existing substations, located at Vuk Karadzic's 27 and Nemanjina 35. Connecting the boiler to the substation, located at Vuk Karadžić 27, is planned to be done with pre-insulated pipes dimension DN125 and length of 40 m. Connecting the boiler to the substation located at Nemanjina 35 is planned to be done with pre-insulated pipes dimension DN125 and length of 60 m. During the construction of the boiler room it will be necessary to relocate the existing pipeline of primary school Desanka Maksimović and carry out new dimensions DN80 and length 55 m. Existing distribution line of pre-insulated pipes from substations to buildings can be used with such solution. Hot water from the boiler is circulated to a substation via a new circulation pump planed in the boiler room. The circulation of water from the substation to the facilities would take over the existing circulation pumps. The location for the construction of a new boiler room is a space between the machine schoolyards technical and elementary school "Desanka Maksimovic". The building boiler room should contain: Picture 21-Planned location of boiler room - Space to accommodate biomass boiler 150m 2 - Space to accommodate daily tank of woodchips 40m 2 - The area of mechanical processing equipment sale 50m 2 - For the stock building, to accommodate wood chip, it is needed surface of 160m2 and useful height of 7m. The total area of buildings on the woodchip boiler is 400m2. - It is planned to install a buffer tank with volume of 10 m 3 in order to optimize the operation of the heat source. Circulator pumps are located between the boiler and the buffer tank, as well as three way mixing valve in order to provide protection for the cold parts of boilers. 17

36 Technical calculation have been made by using boiler documentation series TTP by "Toplingheating Beograd", including additional mechanisms for feeding fuel, extracting exhaust gases and ash. Room woodchip boilers need the usable area of 150 m 2. Storage facility for woodchip is planned right next to the building with the boilers. Storage of sufficient capacity to ensure the operation in the coldest month of the winter season should be placed in the plant. Storage should be of sufficient capacity to ensure the operation for period of three weeks in the coldest month of the winter season. Figure 9 Plan of new boiler rooms and pre-insulated pipes, scenario 1 18

37 Due to limited space, it is not possible to provide a larger stock of woodchip than for a period of two weeks. Because of this it is needed to ensure a constant supply of woodchip or provide other location with larger space for the storage of large quantities of wood chips. The warehouse has a capacity of woodchip 300m 3 of M40 moisture. The storage volume is 450m 3 (gross volume 15 m x 10 m x 5 m). Position boilers and buildings for storage of wood chips is shown in the drawing. For pellet boiler room for kindergarten Neven is necessary to predict the room of 100m 2. Boiler room should contain: - Space to accommodate wood pellet boiler 50m 2 - The area of mechanical processing equipment sale 15 m 2 - Space to accommodate wood pellet 35 m 2 The total area of the wood pellet boiler for kindergarten is 100m2. The space for the boiler room can be provided in the back yard. Connecting the boiler to the kindergarten s substation, is planned by the pre-insulated pipes dimension DN80 and length of 30m. The circulation of the boiler to the substation will be via a new circulation pump. From the substation to the radiator circulation is realized the existing pumps. Storage area for pellet should provide a reserve for a period of two months. For kindergarten is planned boiler wood pellet BIOTERM 350 produce by Termomont Šimanovci. Power of boiler is kW, with regime 90 / 70C. Scenario 2 Construction of seven separated new boiler rooms for each building is planned by this scenario. According to the calculation, total power of pellet boilers is 2430 kw. To provide accommodation for seven boiler plants, it is necessary to build seven boiler rooms with a total useful area of 1625m 2 for wood pellet or 2937m 2 for wood chips as a fuel. Inside the boiler rooms there will be space for storing wood pellets for a period of at least two months. New pipeline to the house heating system is planned each boiler. The obligation of the owner of the object is to provide adequate room for the boiler room or space to build a new one. Scenario 2 Sizing of the boiler Boiler room and storage area chips pellet Volume of water baffer (kw) (m 2 ) (m 2 ) (m 3 ) Mechanical and electrical techical school Priboj Primary school "Desanka Maksimović" Primary school "Vuk Karadžić" High school Priboj Health center ambulance Priboj Residental building ,5 Kindregarden "Neven" TOTAL ,5 Table 21 Boiler rooms surface according to Scenario 2, (Source: Own calculations) 19

38 7. PRELIMINARY COST ESTIMATES The task of this study contain two scenarios. Both scenarios have a task to perform switching to biomass fuel but with a different technical concept. The solution of the task of the study, is a comparative review of three different scenarios. - Scenario 1 - All buildings from the study, except kindergarten Neven will be connected to the new woodchip boiler. For the building of kindergarten, it is planned separate pellet boiler. - Scenario 2 - All buildings will have separate pellet boilers. - Scenario All buildings will have separate woodchip boilers. Fuel switch to biomass heating systems in buildings from the study, should provide less heating costs, reduce CO2 emissions and enable environmental protection as well as greater activation of the local economy with the aim of growing and processing of biomass. It is necessary that investment at this level provide greater financial savings in the budget of the public administration of the municipality Priboj, and thus a quick return on investment. 7.1 PRELIMINARY COST ESTIMATES, SCENARIO 1 The preliminary cost estimate includes investment and operating costs annually. Investment expenses would include the purchase of equipment and boilers, necessary civil works, mechanical works and electrical works on the construction of a new boiler, the heating grid, and connecting objects to a new distribution system. Position Investment costs - Description - SCENARIO 1 ( ) 1. Access road and landscaping plots for the new building and for the route of new pipeline Construction of the fuel storage facility and new boiler room the total area 500m Energy plant, mechanical and electrical equipment works (except boilers) Biomass boilers and associated equipment 200 kw kw kw Chimneys Construction of heating grid for connecting the substations Relocation of existing secondary pipeline to primary school "Desanka Maksimović" Documentation, construction management, commissioning of the plant and heating grid Unforeseen costs CAPEX (Capital Expenditure) Table 22 Investment costs for scenario 1 (Source: Own calculations) 20

39 Position Operational costs - Description - SCENARIO 1 Unit Cost 1. Maintenance % CAPEX / a 1,0 2. Elektricity - costs of the plant kwh el. / MWh ht Labor costs / a Removal and disposal of ash / t Chemical treatment of circulating water / MWh ht. 0,80 6. Unit price of fuel, Percentage share wood chips - pellet / MWh ht. 21,14 7. The costs of facilities servicing / a Insurance costs % CAPEX / a 0,5 9. Depreciation of equipment and installations % / a Depreciation of buildings % / a Boiler efficiency % Efficiency of heating system % 94 Table 23 Operational costs for scenario 1 (Source: Own calculations) 7.2 PRELIMINARY COST ESTIMATES, SCENARIO 2 The preliminary cost estimate includes investment and operating costs annually. Investment expenses would include the purchase of equipment and boilers, necessary civil works, mechanical works and electrical works on the construction of a new boiler, the heating grid, and connect objects to new boilers. Position Investment costs - Description - SCENARIO 2 Wood pellet ( ) 1. Access road and landscaping plots for the new buildings and for the route of new pipeline Construction of the fuel storage facility and new boiler room the total area 1625m Energy plant, mechanical and electrical equipment works (except boilers) Biomass boilers and associated equipment total power 2430 kw Chimneys Construction of pipelines to connecting heating systems in buildings Relocation of existing secondary pipline to primary school "Desanka Maksimović" 0 8. Documentation, construction management, commissioning of the plant and heating grid Unforeseen costs CAPEX (Capital Expenditure) Table 24 Investment costs for scenario 2 (Source: Own calculations) Position Operational costs - Description - SCENARIO 2 Unit Cost 1. Maintenance % CAPEX / a 1,0 2. Elektricity - costs of the plant kwh el. / MWh ht Labor costs / a Removal and disposal of ash / t Chemical treatment of circulating water / MWh ht. 0,80 6. Unit price of fuel, Wood pellet, quolity Ö NORM M 7135 / MWh ht. 38,10 21

40 7. The costs of facilities servicing / a Insurance costs % CAPEX / a 0,5 9. Depreciation of equipment and installations % / a Depreciation of buildings % / a Boiler efficiency % Efficiency of district heating system % 94 Table 25 Operational costs for scenario 2 (Source: Own calculations) 7.3 PRELIMINARY COST ESTIMATES, SCENARIO 2.1 The preliminary cost estimate includes investment and operating costs annually. Investment expenses would include the purchase of equipment and boilers, necessary civil works, mechanical works and electrical works on the construction of a new boiler, the heating grid, and connect objects to new boilers. Position Investment costs - Description - SCENARIO Wood chips ( ) 1. Access road and landscaping plots for the new building and for the route of new pipeline Construction of the fuel storage facility and new boiler room the total area 2937m Energy plant, mechanical and electrical equipment works (except boilers) Biomass boilers and associated equipment total power 2430 kw Chimneys Construction of pipelines to connecting heating systems in buildings Relocation of existing secondary pipline to primary school "Desanka Maksimović" 0 8. Documentation, construction management, commissioning of the plant and heating grid Unforeseen costs CAPEX (Capital Expenditure) Table 26 Investment costs for scenario 2 (Source: Own calculations) Position Operational costs - Description - SCENARIO 2.1 Unit Cost 1. Maintenance % CAPEX / a 1,0 2. Elektricity - costs of the plant kwh el. / MWh ht Labor costs / a Removal and disposal of ash / t Chemical treatment of circulating water / MWh ht. 0,80 6. Unit price of fuel, Wood chips, quolity Ö NORM M 7133 / MWh ht. 19,70 7. The costs of facilities servicing / a Insurance costs % CAPEX / a 0,5 9. Depreciation of equipment and installations % / a Depreciation of buildings % / a Boiler efficiency % Efficiency of district heating system % 94 Table 27 Operational costs for scenario 2.1 (Source: Own calculations) 22

41 8. PRELIMINARY FINANCIAL ANALYSE Sustainability of each scenario will be analyzed for a period of 20 years. Consumption of thermal energy in the future will depend on local climate change. Reduction in thermal energy consumption per unit of installed capacity due to local climate change will be 0.1% per annum. Preliminary financial analysis is carried out for each of the two scenarios. 8.1 PRELIMINARY FINANCIAL ANALYSE, SCENARIO 1 Preliminary financial analysis for scenario 1, contains table of cost of energy production, figure of comparative analysis of cost heat energy and savings, figure saving from fuel switch, figure operational costs and depreciation and figure of cash flow balance. Figure of comparative analysis of cost heat energy and savings, figure saving from fuel switch, figure operational costs and depreciation and figure of cash flow balance are given in the Appendix Biomass - wood chips Biomass - wood pellet Ash Electricity Water Summary Employee Labor costs Maintenance Insurance costs Summary Depreciation Total costs Biomass - wood chips Biomass - wood pellet Ash Electricity Water Summary Employee Labor costs Maintenance Insurance costs Summary Depreciation Total costs Table 28 Costs of energy production, scenario 1; (Source: Own Calculations) 23

42 Scenario 1 presents that in the period of 8 years of the start of exploitation there will be an opportunity for positive business. The advantage of this scenario is that the municipality formed a sustainable heating system, which increases the quality of life and a creates a positive effect on the environment. If we assume that the costs of heating plants are approximately the same in the case of existing fuels (heavy oil), we can conclude that technical solution according to scenario 1, proceeds fast return on invested funds. 8.2 PRELIMINARY FINANCIAL ANALYSE, SCENARIO 2 Preliminary financial analysis for scenario 2 contains table of cost of energy production, figure of comparative analysis of cost of heat energy and saving and figure of cash flow balance. All figures are given in the Appendix Biomass Ash Electricity Water Summary Employee Labor costs Maintenance Insurance costs Summary Depreciation Total costs Biomass Ash Electricity Water Summary Employee Labor costs Maintenance Insurance costs Summary Depreciation Total costs Table 29 Costs of energy production, scenario 2; (Source: Own Calculations) Scenario 2 shows predicts no opportunities for positive business results. This is due to high investment costs and high maintenance costs for construction of seven separate boiler rooms. Larger number of boilers with complex systems for combustion requires hiring more labor force. 24

43 8.3 PRELIMINARY FINANCIAL ANALYSE, SCENARIO 2.1 Preliminary financial analysis for scenario 2.1 contains table of cost of energy production, figure of comparative analysis of cost of heat energy and saving and figure of cash flow balance. All figures are given in the Appendix Biomass Ash Electricity Water Summary Employee Labor costs Maintenance Insurance costs Summary Depreciation Total costs Biomass Ash Electricity Water Summary Employee Labor costs Maintenance Insurance costs Summary Depreciation Total costs Table 30 Costs of energy production, scenario 2.1; (Source: Own Calculations) Scenario 2.1 shows predicts very small opportunities for positive business results. This is due to high investment costs and high maintenance costs for construction of seven separate boiler rooms. Larger number of boilers with complex systems for combustion requires hiring more labor force. 25

44 9. PROJECT EVALUATION Based on the analysis of three proposed scenarios, construction the central wood chips boiler with construction the separate wood pellet boiler for kindergarten heating system, would be more justified then construction seven separate wood pellet boiler rooms. Under scenario 1, and on the basis of investment costs (table 22) and operating costs for the period of 20 years (table 23) economic indicators are calculated an given in the table 31. Unit cost heat energy Unit Value The investment value - Capex Annual production of heat energy (first year of operation) MWh / a Total heat production (20 years) MWh The operation value (20 years) - Opex LUC - Levelized Unit Costs / MWh 39,7 NPV DR % 6 IRR % 9,063 Sensitivity to changes in the price of fuel (biomass) IRR% Price biomass is less 5% 10,100% Price biomass increased 5% 7,985% Price biomass increased 10% 6,891% Price biomass increased 15% 5,743% Table 31 Unit cost heat energy (Source: Own calculations) Economic indicators can be defined investment plan are: - (F) IRR - (Financial) Internal Rate of Return - (E) IRR - (Economy) Internal Rate of Return - (F) NPV - (Financial) Net Present Value - (E) NPV - (Economy) Net Present Value - DR - Discount Rate Based on the results obtained from the analysis of the techno-economic indicators, the conclusion is that the investment in the construction of a new boiler rooms with boilers for combustion of wood chips and wood pellet under scenario 1 is acceptable. IRR = 9,063% > DR = 6 % Financial indicators are sensitive to changes in fuel prices. The increase in price of fuel (wood chips) higher than 10% influence on the profitability of investments. It is necessary to take into account the rise in price of fossil fuels in the future. The use of biomass for energy purposes makes users dependent of disruptions in fossil fuels market. 26

45 10. INSTITUTIONAL ANALYSES Directive No. 2009/28 / EU promotes the use of energy from renewable energy sources. It sets binding national goals for the overall share of energy from renewable sources in final energy consumption (less than 20%), as well as the share of RES in transport (10% of energy from renewable sources in transport by 2020). In order to support investments in renewable energy sources, the Republic of Serbia has passed a number of laws and bylaws relating to the use of biomass and other renewable energy sources. These are the following acts: - Energy Law (Official Gazette of the Republic of Serbia 57/2011, 80/2011- core, 93/2012 and 124/2013), - Energy Sector Development Strategy of the Republic of Serbia by 2015 (Official Gazette of the Republic of Serbia 44/2005), - Amendments and Additions to the Energy Sector Development Strategy by 2015 for the period (Official Gazette of the Republic of Serbia 99/2009), - Law on Planning and Construction (Official Gazette of the Republic of Serbia 72/2009, 81/2009-corr, 64/2010 Decision of the Constitutional Court, 24/2011, 121/2012, 42/2013 Decision of the Constitutional Court, 50/2013 Decision of the Constitutional Court, 98/2013 Decision of the Constitutional Court), - Law on Environmental Protection (Official Gazette of the Republic of Serbia 135/2004, 36/2009, 36/2009 and other law, 72/2009 and other law, 43/2011 Decision of the Constitutional Court), - The Law on The Strategic Assessment of Environmental Impact (Official Gazette of the Republic of Serbia 135/2004 and 88/2010), - Law on the Assessment of Environmental Impact (Official Gazette of the Republic of Serbia 135/2004 and 36/2009), - Law on Integrated Prevention and Control of Environmental Pollution (Official Gazette of the Republic of Serbia 135/2004), - Law on Waste Management (Official Gazette of the Republic of Serbia 36/2009 and 88/2010), - Law on Air Protection (Official Gazette of the Republic of Serbia 36/2009), 27

46 - Law on the Ratification of the Kyoto Protocol to the UN Framework Convention on Climate Change (Official Gazette of the Republic of Serbia International Contracts, 88/2007 and 38/2009 and other laws), Law on the Ratification of the Treaty Establishing the Energy Community between the European Community and the Republic of Albania, Bulgaria, Bosnia and Herzegovina, Croatia, Former Yugoslav Republic of Macedonia, Montenegro, Romania, Republic of Serbia and the UN Mission in Kosovo in accordance with UN Security Council Resolution 1244 (Official Gazette of the Republic of Serbia 62/2006) - National Strategy of Sustainable Development (Official Gazette of the Republic of Serbia 57/2008), - Introduction of Cleaner Production Strategy in the Republic of Serbia (Official Gazette of the Republic of Serbia 17/2009). Biomass Action Plan defines the following projects in the Republic of Serbia: - Synchronization of Serbian technical standards on biomass and bio-waste with the EU, - Biofuels market development project assessment of biomass availability, - Development of policy for long-term supplies of biomass, - Feasibility Study to justify collection of wood waste from forestry in Serbia, - Development of certification on sustainable biofuels/bioenergy in line with EU standards, - Development of a network of sustainable cities/regions in Serbia, - Developing communication strategies for renewable energy in Serbia, - Training for successful project proposals for EU funds, - Demonstration projects related to biomass in line with the best practice of the EU, - Production of a manuals (guidelines) for applying for financial support from banks best experiences. 28

47 11. ENVIRONMENTAL IMPACTS Zone of influence of the project is the area where the biomass is collected, prepared for transportation and transported from municipality Priboj and from the immediate surroundings, which may be registered as the environmental impact of noise, vibration, emissions of particulate matter from the exhaust gases, etc. During the construction of the plant adverse impacts on the local environment may occur as a result of construction and installation works. Particularly negative impact would represent preparing the area for the construction of the boiler room and storage of wood chips where it would be necessary to clear and level the ground. Implementation of these activities involves cutting a dozen deciduous trees and clearing of waste. Construction works will cause noise and vibration generated by using construction machinery as well as increased dust emissions due to works on the excavation of foundations, leveling the field and the development of access roads. All of the above effects are not of great intensity and are relatively short in duration. The area in which the works will be carried out will be protected by the building site fence so that all adverse environmental impacts outside of the borders will be negligible. Prior to the commencement of works, the Investor is required to prepare a study on the organization of the site which will display the work areas, corridors for internal transport, temporary storage of equipment and materials, landfill waste during construction, manner and place of storage of flammable and hazardous materials. The study will show the connection to the outside infrastructure and installations, usage of protective agents, the method of disposal of solid and liquid waste and other specific measures which would to be taken to reduce risks to health and safety of the personnel engaged, as well as environment protection actions. During the operation of the energy block, the harmful substances contained in the exhaust gases will exert the greatest impact on the environment. In addition to dust from the fuel, the exhaust gas also contains solid particles. Adding a cyclone device as a part of a boiler for combustion of biomass would have effects on the following: - Nitrogen oxides (NOx) in the case of combusting low moisture biomass. The temperature of combustion is high in this case and NOx content is significantly higher than in case of combusting biomass with high percentage of moisture. - Sulfur oxides (SOx) are low because of the low sulfur content in the biomass, - Carbon dioxide (CO2) is considered neutral because the biomass is considered a renewable energy source so that the entire amount of the carbon emitted in the exhaust gas has been previously taken from the environment in which the tree grew, - Carbon monoxide (CO) in practical terms does not occur due to the construction of the boilers and constant monitoring of the combustion process. 29

48 In any case, the planned power plant should replace the existing one in which the burning heavy fuel oil (crude oil) is extremely unfavorable for boiler installations within residential areas. The construction itself does not require a significant amount of water. While in operation, the power plant does not have losses and uncontrolled water runoff except in the cases of an emergency breakdown situations. These situations are extremely rare with this kind of plants, so it is safe to say that there is no risk of environmental pollution, as well of pollution of surface and groundwater. The existing sewerage system is able to accept the waste water that may be of atmospheric origin, waters from washing facilities and equipment with a negligible content of oils and fats, waste and sanitary sewage. In the cases of discharging the installations, a coolant tank is used with a fat separator and after the deposition water is discharged into the sewer system. The exhaust gases contain solid particles of ash, which are retained in the cyclone device prior to the introduction into the chimney and discharging into the atmosphere. A metal cartridge is placed into the cyclone where the separated ash is deposited. Also, the boiler unit has a cartridge for the disposal of ash that occurs as a solid residue of the combustion process. The total amount of ash deposited is 100 t/a, i.e. between 300 and 500 kg per day during the heating season. The ash will be deposited in a safe place and once a week transported to the landfill under a contract with the local utility company. The amount of ash is relatively small and does not represent a risk to the environment. The operation of the boilers and electric motor drives in the boiler room is a source of constant noise and vibration. All equipment that emits noise and vibration is located within the area of the boiler room so that the sound is largely absorbed by the walls of the building. After commissioning the boiler room, measures will be taken out to eliminate or bring the noise down to an acceptable level according to the Law on the protection of environmental noise (published in the Official Gazette of the Republic of Serbia No. 36/2009 and 88 / 2010). According to the above mentioned Act, the maximum allowable noise level is 35 db (A) during the day and 30 db (A) during night. The user of this space will adopt certain measures to minimize the negative impact on the environment. These measures will be applied to the control of air emissions, as well as to the management of wastewater, solid waste and noise. The thermal energy for public institutions in the municipality of Priboj is obtained from heavy oil. If the biomass for combustion is obtained by deforestation and without reforestation, an emission of CO2 by biomass combustion would be six times less than from the combustion of heavy oil. If the biomass for combustion is provided from wood waste or from forestation, then reduction of CO2 emissions would be lower by 700 t per year. 30

49 Average Emission CO2 (kg), Comparasion to fuel 800, , , , , , , ,000 0 Existing fuel (kg) - Heavy oil Emision CO2 (kg) - Biomass Figure 10 Emission CO 2 Comparison to fuel 31

50 12. ENERGY EFFICIENCY MEASURES AND CONCLUSION The main task of this study is to reduce the energy costs for heating for primary schools, secondary schools, ambulance health center and kindergarten in Priboj. Objects from this study are supplied by thermal energy through the existing district heating system. The district heating system in Priboj-Varoš is connected to the heavy fuel boilers, which are positioned in the factory FAP. Plant in the factory FAP has two heavy fuel boilers with 26 and 29MW of power. Boiler with the power of 29MW is out of operation. Pipes of district heating system are in bed condition and the substations are without automatic systems of regulations. In order to reduce costs of heating energy the buildings from the study, it is necessary to switch energy source to biomass fuel. For the purpose of elaborating the best solutions according to the criterion of investment and exploitation costs, the task of this study is the creation of three scenarios replacing fuels with biomass: - Scenario 1 - All buildings from the study will be connected to the new woodchip boiler. - Scenario 2 - All buildings will have separate pellet boilers. - Scenario All buildings will have separate woodchip boilers. After collecting the data in order to find the most optimal solution, study will develop three scenarios. In the analysis, solution has been found that changes the scenario 1 and which is slightly different from the originally planned. Scenario 1 - All buildings from the study, except kindergarten, will be connected to the new wood chips boiler. For the building of kindergarten, separate pellet boiler is planned. This solution (solution 1) does not require large investment for the construction of hot-water pre-insulated pipes, with the length of more than 250m. The difference of the investment costs in table: Solution 1 - separate wood pellet boiler for kindergraten ( ) Wood pellet boiler for kindergarten 200kW Construction of the fuel storage facility and new boiler room the total area 100m Energy plant, mechanical and electrical equipment works (except boilers) Chimneys Documentation, construction management, commissioning of the plant and heating grid Total od solution Solution 2 - conection kindergraten to central wood chips boilet ( ) Construction of heating line 250m length from central boiler to kindergarten Documentation, construction management, commissioning of the plant and heating grid Total od solution Difference in costs between solutions = S2-S Table 32 Specification of the investment costs for kindergarten, solution 1, 2 (Source: Own calculations) 32

51 Solution 2 to connect building of kindergarten to central wood chips boiler with pre-insulated pipes, is not the best technical solution. Such a solution would lead to delays delivery of heat energy to kindergarten. The option where kindergarten building is attached to a central boiler room would cause a delay in the warming the kindergarten because of the distance from other facilities and transport of heat through hot water pipes. The reason for this is the large distance of kindergarten from other connected facilities and transport of hot water through a long pre-insulated pipes. Heating systems according to scenario 1, with central boiler to wood chip and wood pellet boiler at the kindergarten "Neven" is planned for operation within temperature regime of the radiator of 80/60 C. Boilers can operate at higher regimes because they are provided with water boiler buffers. From the central boiler house two pipelines are planned. One pipeline leading to the heat substations in the technical school Priboj and second to the substations in the primary school Vuk Karadžić. Heat substation of district heating systems are planned to remain in reserve in case there is a problem with the supply of biomass. Scenario 2 - All buildings will have separate pellet boilers. Analysis of the construction of the heating system according to scenario 2 proved to be economically unviable. Scenario All buildings will have separate wood chips boilers. Analysis of the construction of the heating system according to scenario 2.1 proved very small economically unviable after long period. The municipality Priboj and the district Zlatibor possess a sufficient amount of forests from which biomass needed to operate power plants can be obtained. This would enable local community to act in closed circle of producing of energy cane creation of thermal energy - using heat energy. Construction of the system with a biomass heating represents the infrastructure system which will create benefits to the city Priboj. These benefits will be reflected in the form of: - Lower heating costs, - Reduction of fuel consumption, - Reduction of CO2 emissions, - Reduction of environmental pollution, - Increased comfort and quality of services, - Reduced costs of fuel and maintenance. The building sector in Serbia is particularly important, because it accounts for about 40% of total energy consumption, with a trend for further growth. This high-energy consumption means that the potential energy and environmental savings in the building sector are the largest. Most of the energy is consumed for space heating, although in recent years, increased consumption is recorded for cooling during summer season. 33

52 34

53 140,000 Comparative analysis of cost heat energy and saving, SCENARIO 1 - ( ) 120, ,000 80,000 60,000 40,000 20, Existing fuels 129,29129,16129,03128,90128,77128,64128,51128,38128,26128,13128,00127,87127,74127,62127,49127,36127,23127,11126,98126,85 Wood chips 60,22760,16760,10760,04759,98759,92759,86759,80759,74759,68859,62859,56859,50959,44959,39059,33059,27159,21259,15359,093 Saving from fuel switch x103 69,06368,99468,92568,85668,78768,71868,65068,58168,51268,44468,37568,30768,23968,17168,10268,03467,96667,89867,83067,763 Figure 11 Comparative analysis of cost heat energy and saving, scenario 1 54

54 Saving from fuel switch, SCENARIO 1 - ( ) 69,200 69,000 68,800 68,600 68,400 68,200 68,000 67,800 67,600 67,400 67,200 67, Saving from fuel switch x103 69,0 68,9 68,9 68,8 68,7 68,7 68,6 68,5 68,5 68,4 68,3 68,3 68,2 68,1 68,1 68,0 67,9 67,8 67,8 67,7 Figure 12 Saving from fuel switch, scenario 1 55