Biomass-based heat-generation systems

Efficiency, Reliability,Business

Purpose of the presentation 1.

Olajterv Energy set the goal of setting up and applying a business model in which it implements

Heat-generation projects in Hungarywith the help of subsidies and financial investorsthat are to be supported from environmental protection and employment policy perspectiveson a renewable basis

.

Purpose of the presentation 2.The model’s key components have already been set up.

What is already in place:– Engineering and project management experience and

capacity for the implementation of projects

– Appropriate potential for securing funds in applications through strategic partners (MAPI, OTP Hungaro Project)

– Financial investors with capital strength are available for funding projects in addition to funding available in applications

A presentation of the theory of the heat generation cycle

Forests absorb CO2 in the course of photosynthesis

CO2 re-enters the air

Biomass may be used to generate heat

Forest trees may be cut down to produce biomass

in a sustainable way

Model components

1. Presentation of development locations; Head consumption demand in the energy market (industry, agriculture, heat generation plants)

2. Composition of the underlying fuels, presentation of the efficiency arising out of the price differences between fuels

3. Types of investments, return on investments

4. Financial and non-financial proceeds of development projects

5. EU applications for supporting development projects

Goal to be achieved:- Setting up a model that can be reproduced

1. Project locations

Industrial companies (in the form of technological

heating and hot water)

food industry laundries, dryers metalworking de-greasing

Agricultural companies

hothouses animal husbandry farmsfodder dryers

District heating stations

heating plants for blocks of flats institutional heating plants (hospitals, universities)village heating plants

1.1 Why are district heating stations the main target group?

• They have a stable market but are subject to increasing

pressure due to household heating prices, whilst they

have no capital to invest.

• They have no trade information on the technology and

will not start such investment projects on their own.

• This is the field most preferred by application funding (30

to 85% support intensity).

1.2 Is the district heating station model viable?

• There are currently some 400-500 district heating systems

operating in Hungary, 95% of which use hydrocarbons for

fuel.

• EU directives (reduction of CO2 emission) and economic

aspects also promote the dissemination of cheaper

biomass-based systems.

2. Fuel background

Biomassfuel

Woody base material 80% proportion

Low-quality forestry wood

Timber industry by-products

(edges)

Energy woods grown for

energy purposes

Herbaceous agricultural base

material 20%

Corn cobsSunflower seed

shellsMilling industry

by-products

BiomassHUF 1,400 / GJ

Natural gasHUF 3,400 / GJPrice difference to fund

the projectHUF 2,000 / GJ

2.1 The energy content of the underlying base materials

  Low-quality milled forestry timber

Trees from energy

plantations

Timber industry by-products (sawdust, edges, cutting-area

waste)

Agricultural waste (sunflower seed

shells, corn cobs)

Available stocks ton/year 2,000,000 100,000 810,000 3,100,000

Energy capacity GJ / ton 10,5 10,5 13 14

Purchase price HUF / ton 13,000 12,000 14,000 9,000

Moisture content % 40 40 25 15

Base material unit cost HUF/GJ 1,238 1,143 1,077 643

Energy cost HUF/GJ Boiler

efficiency between 85-90%

1,399 1,291 1,217 726

3. Major types of investment projects

Existing system with central boiler house

Installation of biomass boiler Alteration of boiler house to receive timber chips Development of a building that may be serviced in logistic terms

Existing district heating system with new boiler

house to be built

Installation of biomass boilerConstruction of new boiler house with timber chip storageConstruction (extension) of backbone pipeline

Installation of complete district heating system (boiler house + district

heating pipeline + timber chip storage)

Installation of biomass boiler Construction of new boiler house with timber chip storage Alteration of the complete district heating network to accommodate consumption Connecting city institutions

3.1 Return period of investments

System volume

Total project cost thHUF

Support in applications (45%) thHUF

Composition of owner’s own resources

Recovery of own

resources in years

Recovery of total capital expenditure

in years30% trade investor 70% financial inv.

 

Existing system with central boiler room

1MW 100,000 45,000 16,500 38,500 2.8 5.0

3MW 230,000 103,500 37,950 88,550 2.1 3.8

Existing district heating system

with construction of

new boiler house

1MW 140,000 63,000 23,100 53,900 3.9 7.0

3MW 300,000 135,000 49,500 115,500 2.8 5.0

Installation of complete

district heating network

1MW 189,500 85,275 31,268 72,958 5.2 9.5

3MW 600,000 270,000 99,000 231,000 5.5 10.0

4. Financial proceeds of development

• Savings allow for a reduction of 5-25% of energy costs for consumers compared to gas prices (subject to credit rating and project financing)

•Establishment of income-generating activity in unused agricultural areas, in the form of energy plantations

• Utilisation of timber chips from the timber waste generated in and collected from public municipality areas represents extra income

4.1 ‘Non-financial’ benefits of development

•Elaboration of a long-term independent energy strategy for the city that can be calculated with easily (connecting the new consumers who appear later may bring extra profit)

• Provision of employment opportunity for less qualified

labour (collection and production of base materials, performing logistic tasks)

•Once timber waste is collected from municipality areas and parks, the landscape will be more orderly

• Reduction of Hungary’s dependence on hydrocarbon-based energy, transformation of the energy structure

Applications for increasing energy efficiency (EEOP)

Applications to promote technological development (EDOP)

Applications to support

employment creation (SROP)

5. The EU applications that may promote projects

Overall, the operating conditions for development

are in place

A wide range of EU support

and/or financial investors support

future investments

Use of cheaper fuels has become a requirement of households and municipalities

Technological progress allows

for creating reliable and operational

energy centres based on

renewables

Thank you for your attention.

We are convinced that the economic calculations prepared by us properly

support project viability.

If you have any questions or comments on how the model operates, feel free to

contact us.