report on the opportunities to set up...

REPORT ON THE OPPORTUNITIES TO SET UP BIOMASS-

BASED CHP PLANTS AND SMALL DISTRICT HEATING

NETWORKS IN THE TARGET VILLAGE KOSTOJEVIĆI, SERBIA

Project Title: Bioenergy Villages (BioVill) - Increasing the Market Uptake of Sustainable Bioenergy

Grant Agreement N° 691661

Deliverable N° 4.2 5 reports on the opportunities to set-up biomass based CHP plants and small district heating networks in the target villages

Lead Partner: AEA – Österreichische Energieagentur / Austrian Energy Agency (Austria)

Submission date: December 2017

BioVill – D4.2: Report on the opportunities to set up biomass based CHP plants and small district heating networks in Kostojevići, Serbia

This project has received funding from the European Union’s Horizon 2020 research and innovation programme

under Grant Agreement N° 691661

Imprint

This document is issued by the consortium formed for the implementation of the BioVill project under Grant Agreement N° 691661 by the following partners:

GIZ - Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (Germany) WIP – Wirtschaft und Infrastruktur GmbH & Co Planungs- KG (Germany) KEA - Klimaschutz- und Energieagentur Baden-Württemberg (Germany) AEA – Österreichische Energieagentur Austrian Energy Agency (Austria) REGEA – Regionalna Energetska Agencija Sjeverozapadne Hrvatske (Croatia) SDEWES-Skopje – International Centre for Sustainable Development of Energy, Water and Environment Systems – Macedonian Section (Macedonia) GEA – Asociatia Green Energy (Romania) GIS – Gozdarski Institut Slovenije (Slovenia) SKGO – Stalna Konferencija Gradova i Opstina (Serbia)

Lead Partner for the compilation of this document: AEA – Austrian Energy Agency

Contact: AEA – Austrian Energy Agency Mariahilfer Straße 136 1150 Vienna, Austria Phone: +43-(0)1-586 15 24-0 Fax: +43-(0)1-586 15 24-340 E-Mail: [email protected] www.energyagency.at

Authors of this report: Slobodan Jerotić, Dejan Ivezić, Miodrag Gluščević (SKGO) Herbert Tretter, Shruti Athavale, Martin Höher (AEA)

Copyrights: © 2017 by authors. No part of this work may be reproduced by print, photocopy or any other means without the permission in written from the main authors.

Cover Copyrights: © BB Term, Bajina Bašta

Disclaimer: Neither GIZ nor any other consortium member nor the authors will accept any liability at any time for any kind of damage or loss that might occur to anybody from referring to this document. In addition neither the European Commission nor the Agencies (or any person acting on their behalf) can be held responsible for the use made of the information provided in this document.

Further information about the BioVill project on: www.biovill.eu

mailto:[email protected]

http://www.energyagency.at/

http://www.biovill.eu/


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Contents

Summary of Lists ....................................................................................................................................................... 4

List of Figures ............................................................................................................................................................ 4

List of Tables ............................................................................................................................................................. 4

Abbreviations and Acronyms ..................................................................................................................................... 6

Executive Summary ................................................................................................................................................... 7

1. Introduction .............................................................................................................................................. 10

1.1 The BioVill Project .................................................................................................................................... 10

1.2 Scope of the Deliverable ......................................................................................................................... 10

2. Bioenergy Village ...................................................................................................................................... 11

2.1 Definition of a bioenergy village ............................................................................................................. 11

2.2 Background information on Kostojevići in Serbia .................................................................................. 11

3. Fuel Switch of the existing fossil fuelled District Heating Plant .................................................................. 12

4. Pooling of Heat Demand for the Development of New DH Networks ........................................................ 16

5. Heat Demand Survey ................................................................................................................................ 17

5.1 Survey Results for the District Heating Biomass Plant (Fuel switch) .................................................... 17

5.2 Stocktaking for the Implementation of a Biomass CHP Plant ............................................................... 18

6. Techno-Economical Assessment of a Fuel-Switch to Biomass in the existing Centralized Heat-Only Plant ......................................................................................................................................... 19

6.1 Economic Assessment ............................................................................................................................. 19

6.2 Results of the Economic Assessment ..................................................................................................... 26

7. Techno-Economical Assessment of a potential Biomass-based CHP Plant in Kostojevići ............................ 27

ANNEX 1 – Techno-Economical Assessment of the Biomass-based District Heating Plant ....................................... 31

General Project Information .................................................................................................................................. 31

Technical Project Information ............................................................................................................................... 32

Investment .............................................................................................................................................................. 34

Heat Price Calculation ............................................................................................................................................ 39

Operating Costs ...................................................................................................................................................... 40

Economics ............................................................................................................................................................... 42

Results of the Profitability Calculation .................................................................................................................. 43

Annex II – The B4B BioHeat Profitability Calculator ................................................................................................. 46

Annex III – Techno-Economical Assessment of the biomass-based CHP Plant.......................................................... 47

Financing Parameters ............................................................................................................................................. 47

Technical Parameters ............................................................................................................................................. 48

Running Costs and Heat Revenues ........................................................................................................................ 49

Levelized Costs of Electricity .................................................................................................................................. 50

References .............................................................................................................................................................. 51


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Summary of Lists

List of Figures

Figure 1: Economic Efficiency – Profitability Calculation Using the Discounted Cash-Flow Method ......................... 8

Figure 2: Levelized Cost of Electricity ............................................................................................................................. 9

Figure 3: Boiler Plant in Kostojevići (© Slobodan Jerotić) ........................................................................................... 12

Figure 4: Warehouse with a 100 t tank for Heavy Fuel Oil (© Radovanović, 2017) .................................................. 12

Figure 5: Boilers and Burners in Kostojevići’s School Boiler Plant (© Radovanović, 2017) ....................................... 13

Figure 6: Heating Network in Kostojevići (© BB Term, Bajina Bašta) ......................................................................... 13

Figure 7: Assumed Location of CHP Plant (© BB Term, Bajina Bašta) ........................................................................ 18

Figure 8: Development and Share of Outgoing Payments .......................................................................................... 24

Figure 9: Price fluctuations of Heavy Fuel Oil (Radovanović, 2017) ........................................................................... 25

Figure 10: Levelized Cost of Electricity ......................................................................................................................... 30

Figure 11: Overview on Amount and Shares of Outgoing Payments and Receipts (Revenues) ............................... 44

Figure 12: Influence of a reduced Service Life of 20 years on the Economic Assessment ........................................ 45

Figure 13: Levelized Costs of Electricity ....................................................................................................................... 50

List of Tables

Table 1: Key Figures of the existing District Heating System in Kostojevići (Radovanović, 2017)............................. 14

Table 2: Expected Development of the Heat Demand in Kostojevići DHS (Radovanović, 2017; Conjić 2017)................................................................................................................................................................ 15

Table 3: Heat Demand of the Commercial Sector in Kostojevići DHS (Conjić, 2017) ................................................ 17

Table 4: Technical Characteristics and Investments of a Biomass District Heating System and the fossil fuelled Reference System ..................................................................................................................... 20

Table 5: Financing Parameters of the Biomass District Heating Plant ........................................................................ 21

Table 6: Cash-flow analysis and energy and greenhouse gas related impact of the bio-heat plant ........................ 22

Table 7: Biomass System – Results of the Dynamic Cash Flow Calculation ............................................................... 23

Table 8: Economic Efficiency – Profitability Calculation using the Discounted Cash-Flow Method ......................... 26

Table 9: Overview on basic technical and economic data of the evaluated ORC CHP plant..................................... 28

Table 10: Technical Ability of selected CHP Model...................................................................................................... 29

Table 11: First year investment and operation-related and other running costs ...................................................... 29

Table 12: Estimated GHG reduction ............................................................................................................................. 30

Table 13: General Information on the Biomass District Heating Plant ....................................................................... 31

Table 14: Technical Details of the Biomass Heating System ....................................................................................... 32

Table 15: Technical Performance Data – Biomass Heating System ............................................................................ 33

Table 16: Technical Performance Data – fossil fuelled Reference System................................................................. 33

Table 17: Investment of the Biomass Heating System ................................................................................................ 35

Table 18: Re-investment and other future Investments ............................................................................................. 36

Table 19: Investments of main Plant Components of the Biomass District Heating Plant per Year ......................... 36

Table 20: Investments of the fossil fuelled Reference System ................................................................................... 37

Table 21: Overview of Investment Figures of the fossil fuelled Reference District Heating Plant............................ 38

Table 22: Heat Price Calculation of the Biomass Heating System and the fossil fuelled Reference System .......................................................................................................................................................... 39

Table 23: Operating Costs of the Biomass Heating System ........................................................................................ 40


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Table 24: Outgoing Payments of the fossil fuelled Reference System ....................................................................... 41

Table 25: Financing of the Biomass Heating System ................................................................................................... 42

Table 26: Financing of the fossil fuelled Reference System ........................................................................................ 42

Table 27: Profitability Calculation of the Biomass Heating System and the fossil fuelled Reference System .......................................................................................................................................................... 43

Table 28: CHP Financing Parameters ............................................................................................................................ 47

Table 29: CHP Technical Parameters ............................................................................................................................ 48

Table 30: CHP Running Costs and Heat Revenues ....................................................................................................... 49

Table 31: Levelized Costs of Electricity ......................................................................................................................... 50


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Abbreviations and Acronyms

AEA Austrian Energy Agency CHP Combined Heat and Power DH District Heating DHS District Heating System EMS Public company which manages an electric grid in Serbia EUR Euro IPCC Intergovernmental Panel on Climate Change kW Kilowatt kWel Kilowatt electrical capacity kWth Kilowatt thermic capacity kWh Kilowatt hours kWhel Kilowatt hours electrical capacity kWhth Kilowatt hours thermic capacity LBWG Local Bioenergy Working Group LCA Life-Cycle-Assessment LCV Lower calorific value MW Megawatt MWel Megawatt electrical capacity MWth Megawatt thermic capacity MWh Megawatt hour NPV Net Present Value ORC Organic Rankine Cycle WACC Weighted Average Cost of Capital


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Executive Summary

Background

This report presents the analyses of the opportunity to set up a biomass based small district heating plant in the village of Kostojevići in Serbia by a fuel-switch from heavy fuel oil to biomass at the existing district heating grid. In the second part of the report, the investigation results of the integration of a biomass CHP plant into that district heating grid is provided. Both systems are evaluated at a pre-feasibility level in this report. The data collected by the local bioenergy working group (LBWG), the assumptions made and the results calculated reflect the initial status of the assessed projects.

The projects described here is expected by the LBWG to become viable. However, it might take a further year to substantiate a number of parameters that are sensitive with regard to economic results. There is a strong trade-off between the district heating price (the economic viability of the plant) and its attractiveness for potential DH consumers. To substantiate a hopefully attractive DH price, an investor has to be identified, communication with potential consumers has to be intensified, an in-depth heat demand survey has to be conducted and, finally, an optimized technical planning and reliable cost surveys have to be performed. As soon as the actual heat demand and the cost figures are settled, the levelized cost of the DH generation and the DH price applicable to DH consumers can be substantiated. This is when DH consumers can take a decision on long-term connection. As it can be the case that fewer consumers connect than expected, the project can fail even at that advanced status.

Hence, it is hard to predict in an early project phase whether a project is economic viable. The process of substantiating economic viability of the proposed centralized biomass projects is documented in the BioVill Deliverable 5.4. In the following, background information of the initial status of the projects assessed is given as well as the results of the DH and CHP pre-feasibility study are presented.

Biomass DH plant

The existing district heating system in Kostojevići uses heavy fuel oil for heat production to supply households and public buildings. This pre-feasibility study analyses the viability of a fuel switch to biomass, i.e. wood chips. Based on an increased utilization of the existing DH grid by re-connection of former DH consumers and connection of new consumers, the installation of new biomass boilers instead of a refurbishment of the existing oil boilers is planned.

The total annual space heat demand of all 93 consumers was assumed to be around 8,842 MWh/a. The total connected consumer peak load is 1.4 MW. For the existing DH grid with a trench length of 2,900 m, losses of 25% of heat produced were assumed after reconnection. The DH plant has to compensate the supplied heat load for the grid losses. It is also taken into account that the cumulated consumer peak load is never demanded at the same time. Considering the assumed grid losses and the simultaneity factor (60% of load is required at one time), the district heating plant needs to supply a peak load of approximately 1,120 kW at the boiler fringes.

The 1,120 kW peak load of the DH plant is not fully covered by wood-chip boilers to allow longer operation of smaller, cheaper biomass boilers. Therefore, the capacity of the two new biomass boilers is planned with 500 and 200 kWth (due to load management and cost optimization reasons), whereas the capacity of one of the two existing heavy fuel oil boilers accounts for further 750 kWth (for peak load and back-up purposes). The latter boiler, due to sizing of the biomass boilers, will cover less than 10% of the total annual heat supply of the DH grid.

The total investment sum for the new biomass DH plants adds up to 280,000 EUR (excl. VAT). The refurbishment of the existing fossil-fueled plant would need an investment of only 20,000 EUR (excl. VAT). The latter is called the fossil-fuelled reference system. Its economics is compared to those of the alternative biomass system. The financing of both systems is based on 30% equity from own funds and 70% from a credit line. No investment subsidies were included in the analysis. The average cost of capital (WACC, pre-tax) was set to be 3.51% for both systems. The biomass costs were assumed with 15.6 EUR/MWh in 2019 (excl. VAT), while the heavy fuel costs were set to 40 EUR/MWh (excl. VAT). All outgoing payments and the incoming revenues (DH sale revenues) were indexed over service life.

Fehler! Verweisquelle konnte nicht gefunden werden. shows a comparison of the economic indicators between the new biomass DH system and a refurbishment of the existing heavy oil DH system. The levelized biomass DH generation costs in 2019 are 48.4 EUR/MWh. The DH generation costs of the fossil-fueled reference system are 66.8 EUR/MWh. With an assumed DH price of 50.30 EUR/MWh starting in 2019 (first year of operation) and increasing with 2% p.a. over the calculated service life of 25 years, the refurbished fossil-fueled DH system does


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not pay off (amortize) at all. The new biomass DH system amortizes dynamically within 10.5 years. The internal rate of return of the biomass DH system reaches 8.66%; the net present value is 56,000 EUR.

Figure 1: Economic Efficiency – Profitability Calculation Using the Discounted Cash-Flow Method

Thus, the fuel switch to biomass is beneficial to the DH consumers if the consumers, who would need to reconnect and connect newly to the existing DH grid, accept a DH price of 50.3 EUR/MWh for 2019.

The comparison includes a re-investment of the boilers and the related electric and hydraulic equipment for both systems after 20 years of operation (see the development of the cumulated net present value after 20 years of operation in the graph above). Even though this is a large investment for the biomass system, it is obvious that a new biomass DH system is economically advantageous compared to a refurbishment of the existing fossil-fueled DH system. In addition, the new biomass DH system, compared to the refurbished fossil-fueled DH system, avoids the thermal utilization of 2.65 GWh/a of heavy fuel oil and the emission of 798 t/a of CO2 (equivalent).

Biomass CHP plant

The second part of this report refers to the assessment of the viability of the installation of a biomass CHP plant, which injects part of its heat produced into the existing grid of the DH plant assessed before. This assessment is based on an Organic Rankine Cycle (ORC) CHP plant with an electrical capacity of 130 kWel and a thermal capacity of 630 kWth.1 In the aforementioned scenario including the stand-alone biomass DH plant, two biomass boilers, one with 500 kWth and another with 200 kWth, as well as a 750 kWth fuel oil peak/back-up load boiler, have been planned. In the newly defined “biomass DH + biomass CHP” scenario, the DH plant would have a 170 kWth biomass boiler and the 750 kWth fuel oil peak/back-up load boiler, as 630 kWth injected into the grid are delivered by the biomass CHP in order to cover 1.12 MW peak load supplied in the DH grid. In this scenario, the following amounts of heat derived from biomass would be injected into the DH grid:

482.1 MWh/a delivered from the biomass boiler, standing in the DH plant

1,786.8 MWh/a delivered from the biomass CHP (i.e. 2,836 full load hours of CHP operation), which shall be located close to a new company, which needs heat during summer and transitional seasons for cold or process heat purposes

Assuming the same DH price of 50.3 EUR/MWh sold and heat generation costs of 48.4 EUR/MWh for 2019 for the combined DH + CHP plant as for the stand-alone DH plant, the maximum price for the heat directed from the

1 ORC was selected as it is an efficient CHP technology, especially for smaller plant capacities below 500 kWel. Beyond this threshold capacity, the more widespread water steam turbines become viable from an electrical efficiency point of view.

7045 Discounted Cash-flow analysis (based on VDI 2067) - Results

7046 Biomass Heating System Fossil Fuelled Reference System

7047 Discounted Payback Time 10.5 a Discounted Payback Time > 25,0 a

7048 55,932 EUR -490,953 EUR

7049 8.66 % #ZAHL! %

705048.42 EUR/MWhsold 66.76 EUR/MWhsold

7052 Energy and greenhouse gas related impacts of the bioheat plant Reduction compared to fossil fuelled Ref-System

7053 2,649.3 MWh/a 90.3 %

7054 798.2 t CO 2-eq/a 89.2 %

7055 -84.4 MWh/a -2.9 %

7057 Figure(s): Development of the NPV for a calculated service life of 25 years - visualization of the dynamic payback time.

Net Present Value (NPV, at service life/capital cost chosen)Net Present Value (NPV, at service life/capital cost chosen) (EUR)

Calculatory Heat Generation Cost

Annual fossil fuels subsituted by bioheating system

Annual greenhouse gas savings (LCA, CO2-equivalent)

Annual energy savings (total fuel input, NCV)

Reduction compared to fossil fuelled Ref-System



Net Present Value (NPV, t=25 yrs.)

Internal Rate of Return (IRR, t=25 yrs.)




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biomass CHP plant into the DH grid would be 33.2 EUR/MWh for 2019. This calculation accounts for less personnel and biomass fuel demand and investment at the biomass DH plant compared to the stand-alone biomass DH plant scenario.

A biomass based CHP plant below 1 MW in Serbia currently is granted with a maximum electricity remuneration of 13.26 eurocents/kWhel for a period of 12 years. Thus, the biomass CHP plant would have to sell another 1,791.6 MWh/a of heat on top of that supplied to the existing DH grid (i.e. during summer and transitional seasons) with net revenues of 50.3 EUR/MWh in order to become economic viable. If the biomass based CHP plant is able to utilize an average of 80% of the heat produced over the year, it would have to run 7,100 full load hours to gain the electricity and heat revenues needed for becoming economic viable. The joint stock company “Elektromreža Srbije” (EMS) is obliged to take over and refund all electricity injected into the public grid that is produced using renewable energy sources.

It was estimated that the biomass CHP plant would cost about 0.88 million EUR and 20% investment subsidies were assumed. The average cost of capital (pre-tax) was set to 4.13%. In the model case a high utilization of the plant with 7,100 full load hours of plant operation and 5,680 full load hours of heat sales and net heat revenues of 41.7 EUR/MWh on average were assumed. The mixture of electricity and heat production full load hours serves an annual fuel conversion efficiency of 60.8% (incl. plant own electricity demand). It was assumed, that the CHP plant consumes 13% of the electricity production itself. For the economic assessment, a full cost annuity calculation was performed with a calculated service life of 12 years. The biomass costs were set to be 15.6 EUR/MWh (excl. VAT). All outgoing payments and the incoming revenues (neat heat revenues) were indexed over service life. Considering the assumptions made, the economic assessments’ results show that levelized cost of electricity in the amount of 12.4 eurocents/kWh (124 EUR/MWh) can be achieved (see Figure 2).

Figure 2: Levelized Cost of Electricity

The remaining question is, if a commercial heat consumer can be found, who is able to take over an additional 1,791.6 MWh/a at a price of 50.3 EUR/MWh on top of the heat injected into the existing DH grid. The heat with a load of 630 kWhth/h would have to be purchased outside the heating season of the DH grid enabling another 2,836 full load hours of the CHP during summer and transitional seasons. The municipality hopes that investors of the food or wood processing branch, who would need such a quality and quantity of heat and who would pay 50.3 EUR/MWh, can be won. Potential candidates are the distillery “Global” and the cold store “Hladnjača – Mileta Mitrović”.


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1. Introduction

1.1 The BioVill Project

BioVill is a three years project supported by the European Union's Horizon 2020 research and innovation programme with a budget of around 1.99 Mio EUR. The project started in March 2016 and is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in collaboration with eight partners from the BioVill target partner countries Croatia, Macedonia, Romania, Serbia and Slovenia, as well as from Germany and Austria.

Many South East European countries have high biomass potentials, but they are often not or only inefficiently used for local energy supply and regional economic development. Thus, the overall objective of the BioVill project is to support the development of regional bioenergy concepts and the establishment of bioenergy villages in Croatia, Macedonia, Romania, Serbia and Slovenia. This will be achieved by identifying suitable biomass value chains according to local and regional needs and transferring existing experiences in Austria, Germany and other European countries to the South-Eastern European partners. Thereby the market uptake of domestic bioenergy supply chains will be increased and the role of locally produced biomass as a main source of energy supply and added value for the local and regional economy will be strengthened.

Core activities of the BioVill project include national and local framework analyses, technological and economic assessments of local bioenergy value chains, development of the institutional set-up and energy management concepts for the potential bioenergy villages as well as capacity building on financing schemes and business models. As a key factor of success, the BioVill project uses a multi stakeholder approach fostering the involvement and active participation of the citizens and all relevant stakeholders in the planning and implementation process.

Major results of the BioVill project will be the initiation of at least five bioenergy villages in the target partner countries up to the investment stage for physical infrastructure, the raise of public acceptance and awareness of a sustainable bioenergy production and its commercial opportunities as well as increased capacities of users and key actors in business and legislation to sustainably manage bioenergy villages and to enact national and EU legislation. Altogether, the BioVill project will contribute to the expansion and sustainability of the bioenergy markets in Europe and the European Union.

1.2 Scope of the Deliverable

The deliverable D4.2 includes seven reports, one per target village, on the opportunities to set-up biomass based CHP plants and small DH networks in the seven target villages of the five BioVill partner countries (HR, MD, RO, RS, SL). As a part of D4.2, this report presents in detail the results of the analyses and calculations, which were done in the target village of Kostojevići in Serbia. The general structure and content of all seven reports is similar, but was adjusted to the local conditions by the responsible partner in the partner country.

Every report presents the specific potential solutions for pooling the heat demand and developing and implementing the necessary infrastructure measures to establish a heat-only biomass based DH system for the respective target village. In addition, five of the reports also contain an assessment of the potential establishment of a biomass based CHP plant, either tailor-made for the specific situation in the target village or as a model, in case heat load and especially the annual hours of heat load demand are not sufficient (e.g. > 6.000 h/a) for establishing a CHP plant. Furthermore, pre-feasibility statements were made regarding the economic and technical viability of the selected solutions, taking into consideration actual costs and saving potentials as well as the potential market development. The analyses and calculations were done by the target country partners and were supported by the Austrian Energy Agency, mainly using AEA’s calculation tools and templates.


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2. Bioenergy Village

2.1 What is a bioenergy village?

A bioenergy village is a village, municipality, settlement or community, which produces and uses most of its energy from local biomass and other renewable energies. Biomass from forestry, agriculture and waste is used in a bioenergy village to generate electricity and heat. This is usually implemented by several technologies of different sizes, such as woodchip boilers, pellet stoves, logwood boilers, biogas plants, combined heat and power plants using woodchips etc. They usually supply a small district heating grid of the village in order to distribute the heat to the consumers. The planning and installation of renewable energy technologies is often accompanied with energy efficiency measures. Besides supporting an increased use of renewable energies and its positive effects on climate and environmental protection, a central objective of a bioenergy village is to strengthen the local economy, as the expenses for energy remain in the region.

The involvement and participation of a broad range of local stakeholders and consumers is crucial for the success of a bioenergy village. Ideally, biomass suppliers and energy consumers are shared owners of the necessary installations. The concept to set-up bioenergy villages was developed through concerned citizens’ movements aiming to contribute in making the energy sector environmental friendlier. Initiatives like Jühnde in Germany, Güssing in Austria and Samsø in Denmark are well-known bioenergy villages that contributed to this development. Today, several hundred bioenergy villages exist in these countries.

What are the objectives of a bioenergy village?

There is no “official” definition of a bioenergy village included in legislations or similar. However, several projects and networks describe key parameters of a bioenergy village. The objectives include:

The biomass feedstock is produced locally and in a sustainable way.

The power supply from local renewable energies is at least as high as the energy demand of the village.

The heat is provided by locally produced biomass or other renewable energies.

The business model allows also consumers, farmers and forest owners to become shared owners of the installations.

The creation of the bioenergy village is based on a high level of public participation.

2.2 Background information on Kostojevići in Serbia

Kostojevići is located in the municipality of Bajina Bašta, in Western Serbia. Kostojevići is a small village, but it has some urban characteristics and is surrounded by wooded mountains. The local school and 40 households in the village are heated by a district heating system based on heavy fuel oil. In the surroundings of the village (e.g. Tara Mountains), the territory of the municipality of Bajina Bašta is rich with woods providing good preconditions to replace the crude oil with biomass as main energy source. In addition, a certain number of wood processing facilities exist that can be included in the process in a proper way. By using the available local renewable energy sources more efficiently and expanding the local district heating system, it is possible to connect more local institutions (health centre, library, pharmacy, veterinary station) and 40 additional households to the heating system. The local district heating system could be additionally improved through connections with the local business sector (producers of beverages, small trade and car repair shops). Further background information on Kostojevići is available in Deliverable 4.1 of the BioVill project.


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3. Fuel Switch of the existing fossil fuelled District Heating Plant

District heating in the Republic of Serbia exists in 57 cities/municipalities, and their total nominal installed capacity is 6,700 MW (Banjac et al. 2015). Produced heat is mainly used in households (56%), after that in industry (33%) and eventually in the public and commercial sector (11%). Natural gas is the dominant fuel in district heating plants with a share of 76.5%. Heavy fuel oil and fuel oil accounts for 13.2% and coal for 10%. The share of wood fuels used in district heating plants is only 0.3%. However, a strategic goal of the Serbian energy sector is the change of the structure of fuels used in district heating systems. The reduction of the coal and liquid fuels (heavy fuel oil and fuel oil) share in heat production should be followed by increasing the biomass share to 12.1% by 2025.

A fuel switch in the existing district heating plant in Kostojevići, i.e. using biomass as a fuel instead of heavy fuel oil, is in line with this strategic aim.

The district heating system in Kostojevići has been operating since 2007 as a part of the public utility company “BB term” from Bajina Bašta. A boiler plant (Figure 3) and a separate warehouse with a 100 t tank for heavy fuel oil storage (Figure 4) are located in the local schoolyard.

Figure 3: Boiler Plant in Kostojevići (© Slobodan Jerotić)

Figure 4: Warehouse with a 100 t tank for Heavy Fuel Oil (© Radovanović, 2017)


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Figure 5: Boilers and Burners in Kostojevići’s School Boiler Plant (© Radovanović, 2017)

The total capacity of the boilers adds up to 1.5 MW. There are two “Ivar” boilers with “Weishaupt” burners, each with a power of 750 kW (Figure 5). The system regularly operates with one boiler, while the second boiler is the reserve in case of failure of the first one. The fuel that is now being used is heavy fuel oil (Low HV = 11.21 kWh/kg). The district heating network is 2.9 km long and it is made of reinsulated steel pipes. A sketch of the heating network is presented in Figure 6 (the DH pipes are shown by red lines).

Figure 6: Heating Network in Kostojevići (© BB Term, Bajina Bašta)

The system was designed to operate as a water heating system in the 90°/70°C temperature regime. It is a direct system without any substation. The system is also not equipped with any measurement devices, neither at the side of heat production, nor at the side of heat consumption. The only reliable measurement refers to the fuel consumption of the system. Further information on the system is included in D4.1 of BioVill.

The maximum heating area was 3,474 m2 in the period of 2008-2010. Then, 38 households (2,230.25 m2) as well as the local school (1,128 m2), the ambulance (50 m2) and some commercial facilities were connected to the grid. The maximum number of ever-connected consumers was 42. However, meanwhile some customers decided to switch to individual heating systems, mostly using their own firewood. Presently, only 25 households with an area of 1,262.25 m2 (located in one multistorey building with 12 apartments and 13 private owned houses), the local school and the ambulance use a centralized heating system.


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Detailed data about the district heating system in Kostojevići including data about the grid, boilers, consumers and fuels are presented in Table 1. The table stems from a heat demand survey Excel file, developed by the Austrian Energy Agency. As measured data on the real energy consumption and efficiency of the system are not available, the presented data are based on estimates of the local utility, which is the operator of the district heating. Therefore, a local expert team the adjusted data about the total heat load of connected consumers and grid losses were to more realistic values.

Table 1: Key Figures of the existing District Heating System in Kostojevići (Radovanović, 2017)

Key Figures District Heating System Unit Data

Plant name name Kostojevići DHS

Data received by name Velimir Radovanović

Grid data

Start of operation year 2007

Number of connected consumers - 42

Heated floor surface area m² 3,461

Total heat load of connected consumers kW 500

Max. Flow Temperature °C 90

Trass length of total district heating grid (half of pipe length) m 2,900

Max. Return Temperature [°C] °C 70

District heating grid losses in % of produced heat (of boiler heat output)

% 25%

Type of main fuel used Heavy fuel oil

Total nominal heat capacity of installed boilers (main fuel) kWoutput 1,500

Nominal capacity of (main fuel) boiler 1 kWoutput 750

Nominal capacity of (main fuel) boiler 2 kWoutput 750

Average annual efficiency of main fuel boilers (output/input of energy)

% 90.0%

Installed hot water storage for buffering district heat demand litres Does not exist

Consumer data

Bottom-up energy consumption data year 2016

Heat sales data source Invoice(s)

Total amount of heat sold to consumers in year 2016 (estimation) MWh/a 680

Average heat price (incl. VAT) in year 2016 EUR/MWh 48.52

Share of space heat of total heat sold % 100.0%

Share of hot water heat of total heat sold % 0.0%

Produced total amount of heat in year 2016 MWh/a 800

Fuel data

Top-down fuel consumption data of year year 2016

Type of main fuel used Heavy fuel oil

Measured fuel consumption data available Y/N N

Fuel demand data source (main fuel) Estimation

Year of fuel consumption (main fuel) year 2016

Amount of main fuel consumed kg 80,000

Lower calorific value (LCV) of main fuel kWh/unit 11.1

Annual main fuel consumption in year of consumption MWh/a 889

2 Prices for households only (http://www.bbterm.rs/akta/)

http://www.bbterm.rs/akta/


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Climate correction

Heating degree days in year 2016 Kelvin*d 2,892

Heating degree days at normal (average/trend) climate conditions Kelvin*d 2,761

Share of space heat of total demand dependent on weather conditions

% 100

Annual fuel consumption/input corrected for climate conditions MWh/a 849

Annual heat production/output corrected for climate conditions MWh/a 764

Annual full load operation of main fuel boilers h/a 509

Annual heat sales corrected for climate conditions MWh/a 649

From the above-presented data it is evident that the length of the grid is disproportionally high in comparison to the heat consumption and that the relative network losses are too high. The current network heat utilization rate is unacceptably low and amounts for only 276 kWh/m/a. Moreover, the high price of heavy fuel oil adds to the fact that the operation of the district heating system is unsustainable in financial terms. Right from the beginning of operation, it generated permanent financial losses. An additional problem with using heavy fuel oil is its environ-mentally polluting impact.

A projection of further developing the district heating system in Kostojevići includes, besides fuel switch and using biomass, reconnecting all previously disconnected consumers to the system, and connecting additional consumers without further expansion of the network. This is a possible solution, since in the initial plan for the development of the district heating system (DHS) in Kostojevići, 80 household connections in total were envisaged3. To fulfil this plan an additional connection of 38 consumers must be realized. Taking into account that the average size of dwelling per household is 97.1 m2 (SORS, 2013) and that the survey conducted in the commercial sector (Conjić, 2017) identified approximately 2,787 m2 of space area that could be connected to DHS, additional 6,477 m2 could be connected to the grid.

The projections of heat demand, heat load and heat area that should be relevant for the district heating system in 2019 are presented in Table 3. Data about the commercial and public sector in Kostojevići was provided by a survey of current consumption of heat., the annual heat load of households is about 130 W/m2a (Aćimović, Cukanović, 2006) respectively about 140 kWh/m2 (Government of the Republic of Serbia, 2015).

Table 2: Expected Development of the Heat Demand in Kostojevići DHS (Radovanović, 2017; Conjić 2017)

Year 2016 2019

Households Heat demand (MWh/a) 413 930

Heat load (kW) 334 814

Heating area (m2) 2,230 5,920

Commercial and public facilities

Heat demand (MWh/a) 267 941

Heat load (kW) 185 585


Total Heat demand (MWh/a) 680 1,871

Heat load (kW) 519 1,399


3 This information is obtained from PUC “BB Term”. A project documentation of the DHS Kostojevići is not available.


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4. Pooling of Heat Demand for the Development of New DH Networks

This chapter is not relevant for the village of Kostojevići, as there is no design of a new DH networks planned. The existing network covers already the zones in the village -, which comprises the more densely populated village center with accompanying public, commercial and industrial facilities - with high heat demand.


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5. Heat Demand Survey

5.1 Survey Results for the District Heating Biomass Plant (Fuel switch)

For optimizing Kostojević´s district heating system additional connected consumers are required without expan-ding the existing district heating network. Therefore, the survey process was directed (1) to previous consumers of the district heating system who are currently disconnected, (2) to potential, new consumers of the district heating system and (3) to consumers in the commercial sector close to the existing network.

(1) There are 13 households currently disconnected from the district heating network with a total heating area of 968 m2, and one commercial consumer in the same status with a heating area of 50 m2. As the main reason for disconnection was the high price of delivered heat, it is reasonable to assume that their willingness to reconnect is linked with a more affordable price. This assumption was confirmed at the “Info Day” meetings on February 28th and May 5th 2017 in Kostojevići.

(2) At the same meetings, the readiness of additional consumers in the zone close to the existing district heating system was shown, again in the case that the future costs of delivered heat could be comparable with current costs of local heating. It is estimated that the heating area of all households (38) close to the district-heating network amounts to approximately 3,700 m2.

(3) A survey of the commercial sector was conducted by the local stakeholder Eko Frutini doo (Conjić, 2017). In total 11 companies were polled. For heating of 3,104 m2 these companies spent 435 m3 of firewood, 720 liters of LPG and 57,624 kWh of electricity in 2017 (see Table 3).

Table 3: Heat Demand of the Commercial Sector in Kostojevići DHS (Conjić, 2017)

Name of commercial facility

Purpose of the facility Heating

area [m2] Ceiling

height [m] Fuel

Fuel spent [unit/year]

Motel Restaurant & bakery 150 3.5 Firewood 60 m3/year

Burence s.u.r. Restaurant 150 3 Firewood 50 m3/year

Eko

Fru

tin

i do

o

Shop Shop and warehouse 110 2.3 LPG 432 l/year

Building 1 Offices 200 2,6 -3,6 Firewood 20-25 m3/year

Building 2 Kitchen & dressing room 60 2.5 Electricity 13.8 MWh/year

Building 3 Warehouse 60 2.5 LPG 288 l/year

Global d.o.o. Brandy distilling 820 2.4 Firewood 100 m3/year

Gods d.o.o. Offices 110 2.5 Firewood 20 m3/year

Mitrovic Mileta - Cold storage

Offices 54 2.5 Electricity /

Mif petrol Offices 40 3 Electricity 43.8 MWh/year

S.t.r. Podmladak Offices 100 3 Firewood 50 m3/year

Brazil s.t.r. Offices 40 2.5 Firewood 30 m3/year

S.T.R. Balkan Offices 100 2.5 Firewood 40 m3/year

Sawmill Production 300 3 / /

Drier and chair production 450 3 Firewood 60 m3/year

By connecting all residential and commercial/public consumers, the total heat area would be over 10,000 m2, with a total heat demand of 1,870 MWh per year and a total connected consumer heat load of 1.4 MW. This leads to an increase of the network heat utilization rate to 645 kWh/(m grid and year) and represents the maximum that can be achieved without further extending the grid length. It is important to emphasize that a further extension of the existing grid length (2.9 km of grid trench length) is not an option, as sufficient potential new consumers with significant or whole year heat consumption were not identified to justify the necessary investments in a grid expansion.


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5.2 Stocktaking for the Implementation of a Biomass CHP Plant

The analysis of the energy demand structure indicates that a CHP plant in Kostojevici would not be viable due to the lack of significant heat demand in summer. However, in the long-term perspective, there might be possibilities, e.g. by integration of additional processing capacities, to set up a CHP. The village Kostojevići is located in a well-known fruit production region. This fact could be used to identify an investor willing to invest in a food processing line, e.g. jam/marmalade production, with the municipality´s support. Another option would be a fruit or vegetable drying facility or a wood processing plant. An assessment of a possible investment in a food processing plant is not subject of this analysis. It is a recommendation only of what could be done in order to improve the conditions for a future investment in a CHP plant.

Two potential heat consumers have been identified in Kostojevići, such as the distillery “Global” and the cold store “Hladnjača – Mileta Mitrović”. In order to use the heat, additional investments would be needed. In the cold store, the existing compressor plant needs to be removed and new absorption cooling machines need to be installed. And for the distillery, the equipment needs to be changed and the installed technology and current working regime need to be adjusted to the use of heat from the CHP plant. The fulfilment of the necessary technological demands of the commercial consumers would also require technical adjustments of the DH grid, if heat would be supplied via the existing grid (because of required high load gradients etc.), which on the other hand makes the heat distribution to households and public building more complex and difficult.

Another very important issue is the selection of the location of the CHP facility. In case that the CHP plant would be located at the distillery or the cold storage, heat losses would be minimal (see Figure 7). Additionally, the CHP heat for commercial need would be directly transported to the heat consumers to minimize the complexity of the installation. The viability of a CHP plant depends primarily on a balanced heat demand of the existing DH network and large processing companies the year around. That would require that the CHP plant would work for 6,000 - 8,000 h/a and half of the capacity for producing process heat. In order to analyze the potential, an initial feasibility assessment quantified the economic viability for the processing companies and the biomass CHP plant (see chapter 7).

Figure 7: Assumed Location of CHP Plant (© BB Term, Bajina Bašta)


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6. Techno-Economical Assessment of a Fuel-Switch to Biomass in the existing Centralized Heat-Only Plant

In this chapter, a pre-feasibility study of the economic efficiency of a biomass district heating plant using wood-chip fired boilers that should replace the existing heavy fuel oil fired boilers is performed. A significant increase in the number of consumers and heat consumption, without changes at the existing DH grid, was assumed. In the assessed scenario, the district heating plant has a peak heat load of 1.4 MWth and supplies 1.87 GWh/a heat (sold energy) to then 93 heat consumers. The existing grid is used without further investment need. This grid has a trench length of 2.9 km (equaling a pipe length -flow and return pipes - of 5.8 km).

6.1 Economic Assessment

The economic assessment was done with the “B4B BioHeat Profitability Assessment Tool”, developed by the Austrian Energy Agency.4 The investment/cost/price data used for the assessment of the biomass DH system are based on Serbian conditions or, in the case where no reliable data were available, estimated values were accepted from B4B BioHeat Profitability Assessment Tool with adequate expert’s modification.

All calculation sheets of the filled-out tool, i.e. the basic technical characteristics, related investments, financing and the annual outgoing and incoming payments of a biomass heating system and a technical equal fossil-fueled reference system and the results of the assessment are shown as tables in Annex I.

In the proposed 1.4 MWth biomass DH plant, due to load management and cost optimization reasons, two biomass boilers with 0.5 + 0.2 MW should be installed. The existing 0.75 MW heavy fuel oil boiler shall be used as peak load and back-up boiler, which would require approx. 9% of total fuel input per year. The basic technical characteristics and related investments of the biomass heating system and the fossil-fueled reference system (i.e. a refurbishment of the existing fuel oil boiler plant) are given in Table 4 and Annex I.

During annual biomass DH plant operation 1,870 MWh/a will be delivered to the end consumers, while the total heat produced by the plant and injected to the DH grid is 2,493 MWh per year. Taking into account the 83% annual boiler efficiency for 91% of this amount of energy production, an amount of 2,734 MWh/a fuel equivalent is needed (net calorific value), which are woodchips. This equals 3,200 m³/a of loose or 985 t/a fresh or 590 t/a absolute dry wood-chips. For fresh wood-chips, a mixture with equal contents of coniferous wood and non-coniferous hard and soft wood with moisture of 40% and chipped piece-size P45 was assumed. 9% of the annual heat demand is supplied by the back-up fuel oil boiler. This boiler burns about 284 MWh/a (approx. 28,400 l/a) of fuel oil with an annual boiler efficiency of 79%. The average annual full-load operating hours of installed biomass boilers are 3,241 h/a. The annual energy use efficiency of the entire heating plant (heat sold/fuel input) it is 62%.

4 The tool can be downloaded: http://www.bioenergy4business.eu/bioheat-profitability-assessment-tool/

http://www.bioenergy4business.eu/bioheat-profitability-assessment-tool/


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Table 4: Technical Characteristics and Investments of a Biomass District Heating System and the fossil-fueled Reference System

The total investment for the whole biomass DH system is 280,000 EUR excl. VAT. For comparison (reference system) the investment for refurbishment of the existing fossil fuel system are given in the same table. This investment includes only some minor improvements in electric, hydraulic and measurement installations. Therefore, the proposed investment for the fossil-fueled reference system only amounts to 20,000 EUR (excl. VAT). Both, the normally higher up-front investments and re-investments of biomass based heating systems are offset by lower outgoing fuel or lower outgoing total annual payments. Investment subsidies, lowering the surplus upfront investment, were not taken into consideration as such subsidies do not exist in Serbia5.

For the first year of operation (2019), a heavy fuel oil purchase price (free heating plant excl. VAT) of 40 EUR/MWh and a corresponding wood-chip price of 15.6 EUR/MWh was set. Since a regular biomass market in Serbia does not exist yet, the wood-chip price was researched locally (Djaković et al. 2015). It is assumed that both fuel prices equally increase by 2.0% p.a. for the calculated service life of 25 years (until 2041).

The outgoing annual fuel payments are calculated to be 54% lower or 68,500 EUR less for the biomass DH system than for the fossil-fueled reference system in year 4 of operation (see table above, at the bottom). Although biomass DH systems involve higher personnel, service, maintenance and other running costs, the total annual outgoing payments are also lower for the biomass DH system, by 23.5% or 32,600 EUR/a (see table above).

Regarding project financing (details see table below) an equity capital share of 30% was assumed. Both for the biomass DH system and for the fossil fuel reference system the equity capital share applies to the net present value (NPV) of the full investment, as no subsidy is granted. The NPV includes a re-investment of the biomass and

5 Available subsidies specialized for RES heat projects generally do not exist (there is a feed-in-tariff for electricity production and CHP). The National Fund for energy efficiency announced a public call for projects for implementing energy efficiency measures in municipalities in 2014 and 2016. From the 2016 call, 5 RES heat projects got financing or co-financing. There are no publicly announced results of the call, and amounts for particular projects are not known. The total sum for all energy efficiency and RES projects was 1.3 million EUR from the Serbian state budget and additional USD 500,000 as foreign donation.


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fossil fuel boilers of both systems after 20 years of operation. The interest rate for equity, according to the expectations of the potential investor, is assumed to be 5% (after tax) for both systems.

Table 5: Financing Parameters of the Biomass District Heating Plant

The equity capital is 128,000 EUR for the biomass DH and 23,700 EUR for the fossil DH system. The loan interest rate is 2.5% (effective rate, pre-tax) with a lending period of ten years for the biomass and seven years for fossil fuel DH system. Debt capital is 299,000 EUR for the biomass DH system and 55,500 EUR for the fossil fuel reference system.

The profitability assessment is based on a discounted cash-flow analysis (based on cost categories according to VDI Guideline 2067) with a calculated service life of 25 years. The main assumptions and results can be seen in the Table 6 below. The calculations take care of re-investments of plant components according their technical service life and in line with VDI Guideline 2067. Basically, these are a replacement of the boilers and the related electric and hydraulic installations. In year 21 of operation, re-investment is assumed to be 200,000 EUR for the biomass DH system and 80,000 EUR for the fossil fuel reference system. Theoretically, the technical service life of the plant would be extended for another 20 years because of the re-investment. However, the calculated service life is only 25 years. This period is sufficient to show whether the project is able to finance re-investments by itself or not.

Biomass Heating System

Parameter Unit Input Value Reference Value

Investment Capital Structure

Total initial investment (year 0-3) EUR 280,160

Total investment eligible for subsidy EUR 257,000 91.7%

Investment subsidy share (of eligible investment) - if any

subsidies are provided%

30.0%

Investment Subsidy (nominal) EUR 0

Investment subsidy payment year year - < 6

Equity Capital Share (equity capital related to calculatory

total investment minus subsidy)%

30.00% 30.0%

Total calculatory investment (present value) EUR 426,933

Investment Subsidy (present value) EUR 0

Equity Capital EUR 128,000 128,080

Debt Capital (long-term) --> Pls. press the button to re-

calculate EUR 298,933

Debt Captial Conditions

Long term Loan - effective interest rate (after tax) % p.a. 2.13%

Long term Loan - lent term a 10 15

Long term Loan - effective interest rate (pre-tax) % p.a. 2.50% 3.00%

Long term Loan - annuity (interest + redemption) EUR/a 34,156

Equity Capital Conditions

Cost of equity Capital (interest rate) - after tax % p.a. 5.00% 5-8%

Tax rate % p.a. 15.00% 25.00%

Cost of Equity Capital (interest rate) - pre-tax % p.a. 5.88%

WACC pre-tax % p.a. 3.51%

Total calculatory investment (present value)

0.0%

30.0%

70.0%

Investment Subsidy(present value)

Equity CapitalqDebt Captial


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Table 6: Cash-flow analysis and energy and greenhouse gas related impact of the bio-heat plant

The heat sales price was assumed to be 50.3 EUR/MWh6 (excl. VAT) in 2019 (1st year of operation) and was set to increase by 2% p.a., to compensate at least for the inflation rate. That means that the development of incoming payments (from DH sales) is exactly the same for both systems compared.

Based on the assumptions shown in detail in Annex I of this report, for the biomass DH system heat generation costs of 48.46 EUR/MWh were calculated, compared to 66.76 EUR/MWh for the fossil fuel reference system (see above). This corresponds to (dynamic) discounted payback times of 10.5 years (biomass DH system) and over 25 years (fossil-fueled reference system). The net present value (NPV) of the biomass DH system is 55,900 EUR and the internal rate of return is 8.66%. The graphs above show the development of the cumulated NPV for a calculated service life of 25 years. It is evident that relatively high investment and debt capital conditions take the NPV in slightly negative values for the period of debt return. Therefore, even a small percentage of investment subsidies would significantly reduce the payback period. However, also without subsidies, constant revenues would enable necessary re-investments after 20 years of operation.

Further positive aspects of the biomass DH system’s greenhouse gas emissions:

The biomass DH system saves 90.3% of the fossil energy input (in MWh) and therefore avoids 798.2 t CO2-

eq/a compared to the fossil fuel DH system (Table 6).

The reduction/ avoidance of greenhouse gas emissions and other positive effects of a biomass fueled DH system (e.g. on the local economy, energy system security and energy system resilience) are not considered in the economic calculations to establish a level playing field (e.g. by investment subsidies, CO2-taxes) with a fossil fuel DH system. Table 7 presents the annual cash flow calculation of the biomass district heating system.

6 Average between price for households and price for commercial consumers (http://www.bbterm.rs/akta/)

http://www.bbterm.rs/akta/


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Table 7: Biomass System – Results of the Dynamic Cash Flow Calculation

Appendix 1 - Biomass System - Dynamic Cash Flow Calculation Results

Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Year nb. (0=Construction) 0 1 2 3 4 5 6 7 8 9 10 11 12

RECEIPTS (Incoming payments)

Receipts from heat sales 2.00% 95,942 97,861 99,818 101,815 103,851 105,928 108,047 110,207 112,412 114,660 116,953 119,292

Other Receipts (if any)

SUM 95,942 97,861 99,818 101,815 103,851 105,928 108,047 110,207 112,412 114,660 116,953 119,292

PAYMENTS (Outgoing)

Biomass fuel 2.00% 43,498 44,368 45,255 46,160 47,084 48,025 48,986 49,965 50,965 51,984 53,024 54,084

Fossil fuel 2.00% 11,589 11,821 12,057 12,299 12,545 12,795 13,051 13,312 13,579 13,850 14,127 14,410

Electricity 2.00% 3,413 3,482 3,551 3,622 3,695 3,769 3,844 3,921 3,999 4,079 4,161 4,244

Rent for land use 2.00%

Staff 2.00% 1,275 1,301 1,327 1,353 1,380 1,408 1,436 1,465 1,494 1,524 1,554 1,585

Repair & maintenance 2.00% 6,089 6,211 6,335 6,462 6,591 6,723 6,858 6,995 7,135 7,277 7,423 7,571

Other running cost (insurance etc.) 2.00% 2,143 2,186 2,230 2,274 2,320 2,366 2,414 2,462 2,511 2,561 2,613 2,665

Capital expenditures (interest & redemption) 34,156 34,156 34,156 34,156 34,156 34,156 34,156 34,156 34,156 34,156

SUM 102,164 103,524 104,912 106,327 107,770 109,242 110,744 112,276 113,838 115,432 82,902 84,560

FLOW TO EQUITY

Flow to Equity (nominal values) -6,222 -5,663 -5,093 -4,512 -3,919 -3,314 -2,698 -2,068 -1,427 -772 34,051 34,732

Flow to Equity - discounted with cost of equity (pre-tax) 5.88% -5,876 -5,051 -4,291 -3,590 -2,945 -2,352 -1,808 -1,309 -853 -436 18,158 17,492

INVESTMENT

Initial Investment 280,160

Future oter investment (incl. Re-Investment)

SUM 280,160

Investment - Inflation Adapted (inflation adaption rate) 2.00% 280,160

Investment - discounted with WACC 3.51% 280,160

LOAN AND SUBSIDY

Loan 298,933

Subsidy / Grant

SUM 298,933

Y0t - discounted with interest rate for debt (pre-tax) 2.5% 298,933

NET PRESENT VALUE

Cumulated Net Present Value 18,773 12,897 7,846 3,555 -35 -2,980 -5,332 -7,140 -8,449 -9,302 -9,738 8,420 25,913

Year 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043

Year nb. (0=Construction) 13 14 15 16 17 18 19 20 21 22 23 24 25

RECEIPTS (Incoming payments)

Receipts from heat sales 2.00% 121,678 124,111 126,594 129,126 131,708 134,342 137,029 139,770 142,565 145,416 148,325 151,291 154,317


SUM 121,678 124,111 126,594 129,126 131,708 134,342 137,029 139,770 142,565 145,416 148,325 151,291 154,317

PAYMENTS (Outgoing)

Biomass fuel 2.00% 55,166 56,269 57,395 58,542 59,713 60,908 62,126 63,368 64,636 65,928 67,247 68,592 69,964

Fossil fuel 2.00% 14,698 14,992 15,292 15,598 15,910 16,228 16,552 16,883 17,221 17,565 17,917 18,275 18,641

Electricity 2.00% 4,329 4,416 4,504 4,594 4,686 4,780 4,875 4,973 5,072 5,174 5,277 5,383 5,490

Rent for land use 2.00%

Staff 2.00% 1,617 1,649 1,682 1,716 1,750 1,785 1,821 1,857 1,895 1,932 1,971 2,011 2,051

Repair & maintenance 2.00% 7,723 7,877 8,035 8,196 8,359 8,527 8,697 8,871 9,049 9,229 9,414 9,602 9,794

Other running cost (insurance etc.) 2.00% 2,718 2,772 2,828 2,884 2,942 3,001 3,061 3,122 3,185 3,248 3,313 3,380 3,447

Capital expenditures (interest & redemption)

SUM 86,251 87,976 89,735 91,530 93,361 95,228 97,133 99,075 101,057 103,078 105,139 107,242 109,387

FLOW TO EQUITY

Flow to Equity (nominal values) 35,427 36,136 36,858 37,595 38,347 39,114 39,897 40,694 41,508 42,339 43,185 44,049 44,930

Flow to Equity - discounted with cost of equity (pre-tax) 5.88% 16,851 16,233 15,638 15,065 14,512 13,980 13,468 12,974 12,498 12,040 11,598 11,173 10,763

INVESTMENT

Initial Investment

Future oter investment (incl. Re-Investment) 200,000

SUM 200,000

Investment - Inflation Adapted (inflation adaption rate) 2.00% 303,133

Investment - discounted with WACC 3.51% 146,773

LOAN AND SUBSIDY

Loan

Subsidy / Grant

SUM

Y0t - discounted with interest rate for debt (pre-tax) 2.5%

NET PRESENT VALUE

Cumulated Net Present Value 42,764 58,997 74,635 89,699 104,212 118,192 131,659 144,633 10,358 22,398 33,996 45,169 55,932


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Figure 8 presents the development of the outgoing payments over the calculated service lifetime of 25 years. The bottom pie charts show the outgoing payments for the column of year four of operation (in this case 2022) for both systems. In the right pie chart can be seen that 92% of all outgoing payments of the fossil fuel reference system are related to fuel payments. This is an expected result, as this system uses old boilers and mostly existing equipment. And it means that the fossil fuel system is more vulnerable for fuel price increases. In the case of the biomass DH system, the share of fuel payments is 55% (43% for biomass plus 12% for fuel oil). This means that price increases for heating oil have a much greater effect on the heat production costs than would be the case with biomass in the case of fuel costs would rise by the same percentage. That means that the biomass system in that case is much more resilient to fuel price increases regarding heat production costs than the technically equivalent fossil-fueled system. In the cost structure of the biomass DH system, the share of capital expenditures is significant and amounts to 32%. Therefore, investment subsidies for biomass DH systems might be a significant stimulating factor for an investment.

Figure 8: Development and Share of Outgoing Payments

For the fossil-fueled DH system, a purchase price for heavy fuel oil of 40 EUR/MWh LCV is assumed for 2019 (excl. VAT), which is the average value of prices over the last ten years (figure below). It is assumed that this purchase price increases by 2% p.a. from 2019 to 2043.


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Figure 9: Price fluctuations of Heavy Fuel Oil (Radovanović, 2017)

The heavy fuel oil price mainly depends on the oil price on the international market. Therefore, it can be expected that in the future the price of this fuel will continue to be unpredictable and volatile. The marginal price of heavy fuel oil which is necessary that the existing fossil fuel DH system starts to operate economically (without initial investment costs and including re-investment cost) is around 29 EUR/MWh (this would correspond to a decrease of 27.5%). However, even in this case, the calculatory heat generation costs of the biomass DH system (as the peak load fuel is heating oil) are lower and amount only to 46.8 EUR/MWh compared to 49.5 EUR/MWh for the fossil fuel system. Furthermore, the biomass DH system is relatively resilient to an increase in the price of heavy fuel oil, since oil is only needed for the peak energy production and amounts only to 9% of the total annual fuel demand of the system. With a maximal price of heavy fuel oil recorded in the last ten years (58 EUR/MWh), the necessary heat price increase would be only 1.8% to provide a positive NPV.

If the same volatility rate of heavy fuel oil (-27.5% and +45%) is applied to the biomass price, the resulting calculatory heat generation costs would reach 42.19 EUR/MWh and 58.72 EUR/MWh. This is, in the first case, 13% below the originally heat generation cost of 48.42 EUR/MWh of heat sold in 2019, while in the second case this is 21.2% beyond originally cost.

The calculations show that the fossil fuel system is more vulnerable to fuel price increases than a biomass DH system. In addition, the biomass DH system shows also a significant resilience to changes in the biomass prices.

For both systems, a re-investment of plant components according to their technical service life is considered. The biomass DH system achieves its first positive NPV after 10.5 years of operation (in 2030). Thus, in 2039 when the re-investment becomes necessary, the plant has gained enough reserves to finance the necessary investment costs. Municipalities as investors might get along with both, a lower equity share (originally 30%) and lower interest for equity (originally 5%). In case of an equity share of 25% and an interest for equity of 4%, for both systems, the cash flow calculation shows the following result (Table 8).


26

Table 8: Economic Efficiency – Profitability Calculation using the Discounted Cash-Flow Method

6.2 Results of the Economic Assessment

The district heating (DH) system in Kostojevići uses heavy fuel oil for heat production to supply households and public buildings. This pre-feasibility study analyses the viability of a fuel switch to biomass, i.e. wood chips. Based on an increased utilization of the existing DH grid, by re-connection of former DH consumers and connection of new consumers, the installation of new biomass boilers instead of a refurbishment of the existing oil boilers is foreseen. The capacity of the two new biomass boilers is planned to be 500 kWth and 200 kWth (due to load management and cost optimization reasons) and the capacity of one of the two existing heavy fuel oil boiler accounts for further 750 kWth (for peak load and back-up purposes). The latter boiler due to sizing of the biomass boilers would cover less than 10% of the total annual heat supply of the DH grid. The whole DH plant covers 1.4 MW peak load and delivers 1,870 MWh/a heat sold to 93 DH consumers. The total investment sum for the new biomass DH plants adds up to EUR 280,000 (excl. VAT). The refurbishment of the existing fossil-fueled plant would need an investment of EUR 20,000 (excl. VAT), only. Financing in both cases is based on 30% equity from own funds and 70% from a credit line. No investment subsidies are foreseen in the analysis.

Table 6 shows a comparison of economic indicators between the new biomass DH system and a refurbishment of the existing heavy oil DH system. The calculatory biomass DH generation costs in 2019 are 48.4 EUR/MWh. The DH generation costs of the fossil-fueled reference system are 66.8 EUR/MWh. With a DH price of 50.30 EUR/MWh, starting in 2019 (1st year of operation), increasing with 2% p.a. over the calculated service life of 25 years, the refurbished fossil-fueled DH system does not pay off (amortize) at all. The new biomass DH system amortizes (dynamically) within 10.5 years, despite higher investment. The internal rate of return of the biomass DH system reaches 8.66%; the net present value is EUR 56,000. That means that the fuel switch to biomass is beneficial to the DH consumers, if the consumers which would need to reconnect and connect newly to the existing DH grid, would accept a heat price of 50.3 EUR/MWh for 2019.

The comparison includes a re-investment of the biomass and fossil fuel boilers of both systems after 20 years of operation. Due to these facts, it can clearly be seen that a new biomass DH system is economic advantageous compared to a refurbishment of the existing fossil-fueled DH system. In addition the new biomass DH system, compared to a refurbished fossil-fueled DH system, avoids the thermal utilization of 2.65 GWh/a of heavy fuel oil and the emission of 798 t/a of CO2 (equivalent).

All details of the economic assessment can be seen in Annex I.




7048 87,830 EUR -555,857 EUR

7049 8.62 % #NUM! %



7053 2,649.3 MWh/a 90.3 %

7054 798.2 t CO 2 -eq/a 89.2 %

7055 -84.4 MWh/a -2.9 %















-50,000

-

50,000

100,000

150,000

200,000

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

Net

Pre

sen

t V

alu

e (

NP

V, a

t

serv

ice li

fe/c

ap

ital co

st

cho

sen

) (E

UR

)

-600,000

-500,000

-400,000

-300,000

-200,000

-100,000

-

100,000

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

Net

Pre

sen

t V

alu

e (

NP

V, a

t

serv

ice li

fe/c

ap

ital co

st

cho

sen

) (E

UR

)

q


27

7. Techno-Economical Assessment of a potential Biomass-based CHP Plant

Based on assumptions presented in chapter 5.2, currently no possibilities for the integration of a CHP are given in Kostojevići, since there is no significant heat demand during summer and transitional seasons at present. For this purpose, initial analyses were carried out and they resulted in high investment requirements for both the processing companies and the biomass CHP plant. In that scenario most of the heat load of the existing DH grid together with process heat (in an optimal case needed during summer and transitional seasons) would be covered by the biomass CHP plant, to allow a full load utilization of CHP heat for more than 6,000 h/a. In the following chapter, the economic feasibility of that scenario is further analysed.

The pre-feasibility assessment of the economic and technical viability of the planned biomass CHP plant is based on the following facts:

The local community will attract private investors to invest in food (or wood) processing capacities that demand heat during the whole year.

The joint stock company “Elektromreža Srbije” (EMS) is obliged to buy all the electricity produced by the CHP from renewable energy and to pay a subsidized price of 13.26 eurocent/kWh for a period of 12 years for it.

For the purpose of this pre-feasibility assessment, the biomass CHP was designed to fit local conditions. The selected location is very close (<100m) to the location of the existing boiler room. This land belongs to the municipality and can be used free of charge. The technical data are as follows (see also table 7):

Technology – ORC steam turbine module

Fuel – wood chips with a water content of 30%

Thermal input of the fuel – 1.25 MW

Power – 130 kWel

CHPs’ own consumption – 17 kWel

Thermal capacity – 630 kWth

Number of full-load working hours – up to 8,300 h/a.

In the scenario of the stand-alone biomass DH plant two biomass boilers, one with 500 kWth and another with 200 kWth and a 750 kWth fuel oil peak/back-up load boiler were foreseen to cover the DH peak load of 1.4 MWth. In the CHP scenario, the DH plant has installed only a 170 kWth biomass boiler and the 750 kWth fuel oil peak/back-up load boiler, as 630 kWth injected into the grid are delivered by the biomass-based CHP to cover the 1.4 MWth peak load of the DH grid. In this scenario, the following amounts of heat derived from biomass would be injected into the DH grid:

482.1 MWh/a delivered from the 170 kWth biomass boiler of the DH plant

1,786.8 MWh/a delivered from the biomass-based CHP with a thermal capacity of 630 kWth (i.e. 2,836 full load hours of CHP operation), located nearby a company in need of heat during summer and transitional seasons for cold or process heat purposes

Assuming the same DH price of 50.3 EUR/MWh sold and heat generation costs of 48.4 EUR/MWh for 2019 for the combined heat delivery from DH + CHP plant, as for the stand-alone DH plant, the maximum price for the heat taken over from the biomass CHP plant into the DH grid, for 2019 would be 33.2 EUR/MWh. This calculation takes care for less personnel and biomass fuel demand and investment at the biomass DH plant compared to the stand-alone biomass DH plant scenario. Calculation was done by means of the “B4B BioHeat Profitability Assessment Tool”, developed by the Austrian Energy Agency. Details of this calculation are not shown in this report.

A biomass-based CHP plant below 1 MW in Serbia currently is granted with a maximum remuneration of 13.26 eurocent per kWh electricity for a period of 12 years7. Thus, the biomass CHP plant would have to sell additional 1,791.6 MWh/a of heat on top to the heat supplied to the DH grid preferably during summer and transitional seasons to commercial consumers with net revenues of 50.3 EUR/MWh, to become economic viable.

7 The joint stock company “Elektromreža Srbije” (EMS) is obliged to take over and refund all electricity injected into the public grid that is produced using renewable energy sources.


28

Those commercial consumers (due to their heat demand) would have to add another 2,844 full load hours of CHP operation, on top to the 2,836 full load hours achieved by the heat production for the existing DH grid. In total the biomass CHP plant, due to (DH + direct commercial) heat sales would then apply 5,680 full load hours per year. This number of full load hours is not sufficient for the biomass CHP to become economic viable, however. If the biomass CHP plant over the year wastes 20% of its heat produced, it would run 7,100 full load hours. This higher number of full load hours would bring specific capital costs per kWh electricity down to the level needed for becoming economic viable.

The calculations were made by means of the “AEA Solid Biomass Steam Cycle CHP Assessment Tool” developed by the Austrian Energy Agency. In Annex III, all details of the calculation are shown. Table 9 shows the technical and economic parameters of the assessed biomass ORC CHP plant.

Table 9: Overview on basic technical and economic data of the evaluated ORC CHP plant

The remaining question is, if there can be commercial heat consumers found, which are willing to take over the additional 1,791.6 MWh/a, for a price of 50.3 EUR/MWh. The heat (with a load of 630 kWhth/h) would have to be purchased outside the heating season of the DH grid, thus, enabling another 2,844 full load hours of the CHP during summer and transitional seasons. The municipality hopes that investors of the food (or wood) processing branch, who would need such a quality and quantity of heat and who would pay 50.3 EUR/MWh can be found. Potential candidates are the distillery “Global” and the cold store “Hladnjača – Mileta Mitrović”.

If the heat price for commercial use with 50.3 EUR/MWh would be too high, an alternative option might be to increase the heat sales price of the DH system, this would lower the heat price necessary for CHP heat to become economic viable, in summer and during transitional seasons.

Now further details of the assumptions made are given. For the assessment of the viability of the biomass CHP plant the wood chips price is assumed to be 15.60 EUR/MWh as described in Chapter 6. The total investment for the biomass CHP plant and the connecting pipeline amounts for EUR 880,500. This includes the following components:

Boiler and chimney system

ORC module

Control devices and measuring devices

Auxiliary systems

Boiler house and connection pipeline.

The investment/cost/price data used for the biomass CHP plant are based on Serbian conditions or, in the case that no reliable data were available, proposed values are accepted from “AEA Solid Biomass Steam Cycle CHP Assessment Tool” developed by the Austrian Energy Agency with adequate expert’s modification.

Overview Unit ORC 130 kWel

Installed nominal electrical power condensation-mode kW 130

Nominal thermal power CHP-mode kW 630

Specific investment per kW electric (gross) EUR/kWel 6,773

Calculatory interest rate (WACC) pre tax % 4.13

Annual full-load hours (referring to fuel input) h/a 7,000

=> electrical efficiency (net) % 9.0

=> thermal efficiency (net) % 50.4

Plant-own electrical consumption kW 17

Biomass fuel costs year 1 EUR/MWh 15.6

Personnel costs year 1 EUR/a 10,000

Maintenance & Repair costs % of inv. 3.0

Insurance, administrative, other costs % of inv. 0.8

opportunity costs of heat production (net heat revenue) year 1 EUR/MWh 41.9


29

Table 10: Technical Ability of selected CHP Model

The calculated running costs include blue-collar labour costs (for wood-chip feed, operation and controlling of the plant etc.), maintenance and repair costs, spare parts and other related costs like administrative costs and insurance. Additionally, fuel costs, ash removal costs, amortization and capital costs are calculated.

Table 11: First year investment and operation-related and other running costs

Based on former experiences, when investment subsidies were provided for similar projects in Serbia (e.g. construction of CHP biogas plants), the pre-feasibility study considers the possibility to receive 20% of the investment costs as subsidies from the Serbian budget fund for energy efficiency and renewable energy. The rest of the investment costs have to be provided by the credit line under the conditions suitable for the development of energy efficiency and renewable projects.

According to current legislation in Serbia, there are subsidies available for electricity produced using renewable energy including biomass. The funding period is twelve years. The electricity price (feed-in tariff) is Ce = 13.26 eurocents/kWh for a plant with an installed capacity up to 1 MWel.

After the funding period, the electricity can be sold at the market or can be used for own needs, if this is more favorable for the electricity producer. This is the reason why the time span for the economic calculations (annuity calculation considering price increases of payments and revenues) was adapted to twelve years. Production, distribution and heat supply is under the municipal jurisdiction. Subsidized tariffs for heat produced from biomass or any other renewables are not envisaged. Within the municipal jurisdiction, a possibility exists to subsidize biofuel production, but so far, it was not applied.

The calculation results indicate that the biomass CHP plant is not economical if only the generated electricity is sold. Thus, it is necessary to sell the waste heat from the cogeneration process as well. In the case that the heat cannot be sold, the production costs for electricity will be 32.95 eurocent/kWh (see figure below). However, in the case that the electricity can be sold to EMS at the actual feed-in-tariff of 13.26 eurocent/kWh, the minimum revenues from heat sales (average net heat revenue) will amount to 41.70 EUR/MWh.

This heat revenues consist of 1,786.8 MWh/a of CHP heat injected into DH grid with net revenues of 33.20 EUR/MWh (maximum price acceptable by the DH grid) and 1,791.6 MWh/a CHP heat sold directly to companies, which need this heat during summer and transitional seasons and will pay 50.29 EUR per MWh heat delivered. The average net heat revenues (41.70 EUR/MWh) allow the biomass CHP plant to become

Conversion Technology ORC

Technical parameters

thermal input of the fuel Pwood MW 1.25

Installed nominal electrical power condensation-mode Pel kW 130

Electrical efficiency condensation-mode etael % 10.4

Electrical power CHP-mode Pel kW 130

Electrical efficiency CHP-mode (gross) etael % 10.4

Nominal thermal power CHP-mode Pth MW 0.63

Thermal efficiency CHP-mode (gross) etath % 50.4

Total efficiency CHP-mode (gross) etatotal % 60.8

tech

nic

al a

bili

ty

Costs Year 1 (EUR/a)I 704,392

Biomass fuel costs Cbiom 138,450

Ash disposal costs Cash 382

Electricity procurement costs Cel -

Other costs for operating material Cres 6,604

Grid access charges Cgrid -

Maintenance costs Cmaint 26,415

Labor costs Clabor 10,000

Insurance and administrative costs Ci&a 6,604

Other costs Cother -


30

economic viable, i.e. to achieve levelized cost of electricity in the height of the feed-in tariff (13.26 eurocent/kWh).

Figure 10: Levelized Cost of Electricity

As specific capital costs decrease with an increased number of full load hours, it is economic beneficial to run the CHP partly without heat revenues. Therefore, it is assumed, that 20% of the heat generated in the CHP per year will not be utilized. Under this assumption, a minimum of 7,100 full load working hours per year can be achieved by the CHP plant. With this number of full-load hours and the assumptions made, the levelized electricity production costs can be reduced to the level of the feed-in tariff (13.26 eurocent/kWh). From the technical point of view, it seems to be possible since CHPs plants running between 6,000 and 8,000 hours per year. However, as already mentioned above, the major question for the viability of the CHP model is, whether heat consumers can be found that are willing to buy the additional 1,791.6 MWh/a heat during the summer and transitional seasons and pay for it 50.3 EUR/MWh.

The calculation of the reduction of the GHG emissions was based on the IPCC LCA CO2-equivalent GHG emission factors from Covenant of Mayor’s “Reporting Guidelines on Sustainable Energy Action Plan and Monitoring (Version 1.0, May 2014)”. According to that, the estimated greenhouse gas reductions of biomass combustion, when producing heat and power – utilized for the biogas CHP plant, are similar to the emissions of the same amount of electricity taken from Serbian public electricity grid and of the same amount of heat taken from a natural gas boiler. As the result, a reduction of GHG emissions was estimated at 826 t of CO2 (equivalent) per year. The following table presents the assumptions and results.

Table 12: Estimated GHG reduction

IPCC emission factor of wood fuel t CO2e/MWh LHV 0.007

IPCC emission factor of electricity utilized (country-specific) t CO2e/MWhel 0.206

IPCC emission factor of heat utilized t CO2e/MWh 0.202

Estimated greenhouse gas reduction t CO2e/a 826


31

ANNEX 1 – Techno-Economical Assessment of the Biomass Based District Heating Plant

General Project Information

Table 13: General Information on the Biomass District Heating Plant

1010 GENERAL PROJECT INFORMATION

Parameter Input Value

1012 Language to be used for the tool English

1013

Country the project is realized in (and for which country-specific reference values are

loaded) AT

1014 National Currency EUR

1016 Project Start (Year), 1 year before operation starts 2018

1017 Start of Operation 2019

1018 Biomass Fuel Type Wood Chips

1019 Fossil fuel used for the biomass heat plant (for the peak/back-up boiler) Fuel Oil

1020 Fossil fuelled reference system: Fuel type Fuel Oil


32

Technical Project Information

To provide lower investment costs (in the situation without any subsidies), a lower boiler capacity was selected. Consequently, heat fraction generated by fossil fuel is relatively high.

Table 14: Technical Details of the Biomass Heating System


Help Parameter Unit Input Value Reference Value

2015 Annual Heat Demand

2016

District heating projects: heat sold annually ǁ Inhouse-boiler projects: annual boiler

heat output (please insert values adjusted for "heating degree days"only) MWh/a 1,870

2017 Total consumer nominal connection capacity MW 1.400

2018 Number of connected consumers # 93

2019 Simultaneity factor of the heating plant % 60% 60%

2021 Heat Grid Expansion plan

2022 Grid Trass/Trench length incl. trasses to households (at 100% grid expansion) m 2,900

2023 Grid Expansion Year 1 (start of operation) % 100% = 2900 m

2024 Grid Expansion Year 2 % 100% = 2900 m

2025 Grid Expansion Year 3 % 100% = 2900 m

Grid Expansion after Year 3: 100%

2028 Grid related Heat Losses

2029 Old (existing), new or no district heating grid Old Heating Grid Pls. change to the language chosen!!

2030 Heat grid consumer structure (Category A, B or C - See Manual) A

2031 Grid related Heat Losses % 25.00% 25%

2033 Biomass Heating System

2034 Total nominal capacity of the heating plant (max. peak load to be covered) MW 1.12

2036 Biomass Boiler(s)

2037 1. Biomass boiler nominal heat generation capacity MW 0.50 0.52

2038 2. Biomass boiler nominal capacity (if applicable) MW 0.20 0.22

2039 3. Biomass boiler nominal capacity (if applicable) MW -

2040 Total nominal biomass boiler capacity MW 0.70 0.78

2041 Average annual energy use efficiency biomass boiler(s) % 83.0% 83%

2043 Fossil fuelled Stand-by / Peak Load Boiler Fossil fuelled stand-by boiler Pls. change to the language chosen!!

2044 Fossil fuelled Stand-by/Peak Load boiler, nominal capacity (if applicable) MW 0.75 0.50

2045

Actually installed total thermal capacity of the heating plant (must be >= cell value

2034) MW 1.45 1,12 MW needed!

2046 Old (existing) or new fossil fuel boiler (if applicable) Old Pls. change to the language chosen!!

2047 Average annual energy use efficiency Fossil fuel Boiler (if applicable) % 79.0% 79%

2048 Heat fraction generated with fossil fuels % 9.0% < 10 %

2049 Heat fraction generated with Biomass % 91.0%

OK

2052 Biomass Fuel Storage

2053 Utilizable fuel storage room (equivalent to x days of full load operation á 16 h/d) d 5.0 10.0

2054 Fuel Storage Size (including un-utilizable room) m³ 140

2055 Utilizable fuel storage room in comparison to the annual biomass consumption - 2.5%

2057 Electricity Consumption

2058 Specific Electricity Consumption heat grid kWhel/MWhth_gen 6.00 6.00

2059 Specific electricity consumption biomass boiler(s) kWhel/MWhth_gen 11.00 11.00

2060 Specific electricity consumption fossil fuel boiler kWhel/MWhth_gen 4.00 4.00


33

Table 15: Technical Performance Data – Biomass Heating System

Table 16: Technical Performance Data – fossil fuelled Reference System

2064 Calculated energy flow Parameters

2065 Thermal energy delivered/sold to end consumers MWhsold/a 1,870.0

2066 Total heat produced by plant (injected into the heat grid) MWhgenerated/a 2,493.3

2067 Fuel Heat Input Biomass (net calorific value, NCV) MWhfuel, BM/a 2,733.7

2068 Fuel Heat Input Fossil Fuel (NCV) MWhfuel, fossil/a 284.1

2069 Total fuel heat input (NCV) MWhfuel/a 3,017.7

2070 Electricity:

2071 Annual Electricity Consumption heat grid (100% heat delivery) MWhel/a 15.0

2072 Annual Electricity Consumption biomass boiler MWhel/a 25.0

2073 Annual Electricity Consumption fossil fuel boiler MWhel/a 0.9

2074 Annual Electricity Consumption plant (100% heat delivery) MWhel/a 40.8

2076 Performance benchmarks of the biomass heating plant Benchmark figures for Austrian conditions

2077 Network heat utilization ratio kWh/(m*a) 645 min. 900 better > 1200

2078 Network utilization ratio kW/m 0.48

2079 Average annual full-load operating hours of installed biomass boilers h/a 3,241

2080 Average annual full-load operating hours of connected consumers h/a 1,336

2081 Annual energy use efficiency of the biomass boilers % 83.0%

2082 Annual energy use efficiency of the heating grid % 75.0% >80%

2083 Annual energy use efficiency of the heating plant % 62.0% > 70%

2087 Fossil Fuelled Reference System


2089

2090 Nominal heat capacity fossil fuelled boiler 1 MW 0.75 0.84

2091 Nominal heat capacity fossil fuelled boiler 2 MW 0.75 0.84

2092 Nominal heat capacity fossil fuelled boiler 3 MW

2093 Fossil fuelled boilers' total installed nominal heat capacity MW 1.50 1,246.67

2094 Specific Electricity consumption fossil fuel boiler(s) kWhel/MWhth 4.0 4.0

2096 Average annual energy use efficiency of fossil boilers % 85.0% 85%

2097 Total Fuel Heat Input (net calorific value) MWhfuel/a 2,933

This section determines the parameters of the alternative fossil fuelled heating system for comparison with the biomass heating system (characterized by the technical

parameters above).


34

Investment

In line 3007, the annual price increase rate for reference investment values contained in the tool for plant equipment and building related investment (based on 2015 price-figures), can be varied.

The investment reference values are increased from 2015 to the chosen project start year - 2019, by entering a positive price increase rate.


35

Table 17: Investment of the Biomass Heating System



3007

Annual price increase rate for reference investment values used for all plant components (price-base:

2015) 2.0%

3009 Heating grid investment (100% grid expansion)

3010 Heating Network Design:

3011 Grid Trass/Trench length incl. trasses to households (at 100% grid expansion) m 2,900

3012 % sealed surface %

3013 % green field % 100.00%

3014 % DN 20 or 25 %

3015 % DN 50 %

3016 % DN 100 %

3017 % DN 200 % 100.00%

3018 Pipe and Earthwork EUR 1,415,651

3019 Energy Transfer Stations (ETS)

3020 ETS - Average investment per MWh/a sold (depending on plant size) EUR/MWh 37.14

3025 Energy Transfer Stations Investment EUR -

3026 Total heating grid related investment EUR -

3027

3028

Boiler investment, incl. furnace, fuel feeding, measuring and control technology as well as

flue gas cleaning equipment (the latter if required).

3029 Biomass Boiler 1 EUR 98,000 140,541

3030 Biomass Boiler 2 EUR 42,000 58,432

3031 Biomass Boiler 3 EUR N/A

3032 Fossil fuelled Back-up/Peak Load Boiler EUR N/A

3033 Total Boiler Investment of the biomass heating plant EUR 140,000

3035 Construction & development investment (assumed are stand-alone, new buildings)

3036 Boiler house (incl. area development and outdoor related investment) EUR 50,000 110,555

3037 Boiler related electric, hydraulic and steelwork installations EUR 60,000 100,608

3038 Fuel Storage (incl. area development and outdoor related investment) EUR 7,000 10,241

3039 Sum of building costs EUR 117,000

3041 Other initial Investment

3042 Other Investment EUR 15,000

3044 Sub-Sum: Physical investment (Hardware) EUR 272,000

3045

3046 Planning & Approval Costs

3047 Planning and Approval (fraction of physical investment) % 3.0% 3.0%

3048 Planning and Approval (absolute number) EUR 8,160


36

The next table provides an overview of the investments for replacement of plant components based on their service live, according to VDI Guideline 2067.

Table 18: Re-investment and other future Investments

Table 19: Investments of main Plant Components of the Biomass District Heating Plant per Year

3051 Re-Investment and other future investment

2019 EUR - -

2020 EUR - -

2021 EUR - -

2022 EUR -

2023 EUR -

2024 EUR -

2025 EUR -

2026 EUR - -

2027 EUR -

2028 EUR -

2029 EUR -

2030 EUR -

2031 EUR -

2032 EUR -

2033 EUR -

2034 EUR -

2035 EUR -

2036 EUR -

2037 EUR -

2038 EUR -

2039 EUR 200,000 215,000

2040 EUR -

2041 EUR -

2042 EUR -

2043 EUR -

3079 Overview of investment by time of payment date (nominal values)

3080 Total initial investment (year 0-3) EUR 280,160

3081 Total investment year 0 EUR 280,160

3082 Total investment year 1 EUR -



3085 Total investment year 3 to 25 (incl. re-investments according to VDI guideline 2067) EUR 200,000

3087 Overview of initial investment by category (without re-investments)

3088 Heating grid investment (100% grid expansion) EUR -

3089

Boiler investment, incl. furnace, fuel feeding, measuring and control technology as well as flue gas

cleaning equipment (the latter if required). EUR 140,000

3090 Boiler house, fuel storage and boiler related electric, hydraulic and steelwork installations EUR 117,000

3091 Other initial Investment EUR 15,000

3092 Planning & Approval Costs EUR 8,160



37

Table 20: Investments of the fossil-fueled Reference System


3098 Parameter Unit Input Value Reference Value


3102 Boiler Investment

3103 Selected fuel type: Fuel Oil

3104 Fossil fuelled Boiler 1 EUR - 41,215

3105 Fossil fuelled Boiler 2 EUR - 41,215

3106 Fossil fuelled Boiler 3 EUR N/A

3107 Total Boiler investment of fossil fuelled Reference System -

3109 Boiler house, fuel storage and boiler related supplementary installations Investment

3110 Boiler house (incl. area development and outdoor related investment) EUR - 36,852

3111 Boiler related electric, hydraulic and steelwork installations EUR 20,000 56,946

3112 Fuel oil Storage tank volume (equivalent to x days of full load operation) d - 10

3113 Oil storage tank volume (if Applicable) l -

3114 Investment for fuel oil storage tank EUR -

3115 Gas grid connection investment, in % of total gas boiler investment % N/A

3116 Gas grid connection investment -

3117 Coal storage facility investment EUR N/A

3119 Other initial Investment EUR

3121 Planning & Approval Costs

3122 Planning and Approval (fraction of physical investment) % 3% 3%

3123 Planning and Approval (absolute number) EUR 600

3125 Re-Investment and other future investment

2019 EUR - -

2020 EUR - -

2021 EUR - -

2022 EUR -

2023 EUR -

2024 EUR -

2025 EUR -

2026 EUR -

2027 EUR -

2028 EUR -

2029 EUR -

2030 EUR -

2031 EUR -

2032 EUR -

2033 EUR -

2034 EUR -

2035 EUR -

2036 EUR -

2037 EUR -

2038 EUR -

2039 EUR 80,000 20,000

2040 EUR -

2041 EUR -

2042 EUR -

2043 EUR -


38

Table 21: Overview of Investment Figures of the fossil-fueled Reference District Heating Plant

3153 Overview of investment by time of payment date (nominal values)


3155 Total investment year 0 EUR 20,600




3159 Total investment year 3 to 25 (incl. re-investments according to VDI guideline 2067) EUR 80,000

3161 Overview of initial investment by category (without re-investments)


3163


cleaning equipment (the latter if required). EUR -

3164 Boiler house, fuel storage and boiler related electric, hydraulic and steelwork installations EUR 20,000

3165 Other initial Investment EUR -

3167 Planning & Approval Costs EUR 600



39

Heat Price Calculation

Table 22: Heat Price Calculation of the Biomass Heating System and the fossil-fueled Reference System

The net heat sales price of year 2019 (1st year of operation; see line 4015, above) is 50.3 EUR/MWh heat sold. This is the revenue for both the biomass and the fossil DH system.



for 2019 from 2015

4008 Heat Sales Development

4009 Heat-sales - based on grid expansion in year 1 % 100.0% 100%



4012 Heat-sales - based on grid expansion after year 3 % 100%

4014 Heat Price

4015 Average heat sales price (excl. VAT), in year 1 EUR/MWh sold 50.30 80 - 95

4016 Heat-price escalation rate % p.a. 2.0% 2.00%

4018 Other Revenues

Open category to consider eventual additional revenues, e.g. CO2

certificate sales, additional subsidies, other revenues etc. (See Manual for

Details)

2018 EUR

2019 EUR

2020 EUR 0

2021 EUR 0

2022 EUR 0

2023 EUR 0

2024 EUR 0

2025 EUR 0

2026 EUR 0

2027 EUR 0

2028 EUR 0

2029 EUR 0

2030 EUR 0

2031 EUR 0

2032 EUR 0

2033 EUR 0

2034 EUR 0

2035 EUR 0

2036 EUR 0

2037 EUR 0

2038 EUR 0

2039 EUR 0

2040 EUR 0

2041 EUR 0

2042 EUR 0

2043 EUR 0


40

Operating Costs

Table 23: Operating Costs of the Biomass Heating System



for 2019 from 2015

5007 Biomass Fuel Costs

5008 Selected fuel type: Wood Chips

5009 Biomass fuel price EUR/MWh 15.6 18 - 28

5010 Biomass price escalation rate % p.a. 2.00% 2.00%

5011 Annual biomass fuel costs (theoretically; in year 1, at 100% grid expansion) EUR/a 42,645

5013 Fossil Fuel Costs

5014Selected system

5015 Fossil fuel price EUR/MWh 40.00

5016 Fossil fuel price escalation rate % p.a. 2.00% 2.00%

5017 Annual fossil fuel costs (theoretically; in year 1, at 100% grid expansion) EUR/a 11,362

5019 Electricity Costs

5020 Electricity purchase price EUR/MWh 60.00 45 - 130

5021 Electricity price escalation rate % p.a. 2.00% 2.00%

5022 Annual electricity costs (theoretically; in year 1, at 100% grid expansion) EUR/a 3,347

5024 Staff Costs (excl. R&M)

5025 Weighted annual salary of staff categories required (year 1) EUR/a 5,000 43,000

5026 Total person years of staff required Person-years 0.25 0.30

5027 Staff costs - escalation rate % p.a. 2.00% 2.00%

5028 Annual Staff Costs (in year 1) EUR 1,250

5030 Inflation Rate % p.a. 2.00% 2.00%

5032 Repair- and Maintenance Costs (R&M) according to VDI Guideline 2067

5033 Annual R&M costs in % of total investment % 2.13% 2.13%

5034 Repair- & Maintenance costs (year 1) EUR/a 5,970

5035 Repair- & Maintenance costs - annual increase % p.a. 2.00% 2.00%

5037 Property Costs

5038 Annual property costs / rent / lease EUR/a

5039 Annual property costs increase % p.a. 2.00% 2.00%

5042 Other annual costs

5043

Other annual costs (e.g. Insurance, ash disposal, wheel loader operation (excl.

driver), etc.) considered as fraction of the total investment %

0.75% 0.75%

5044 Annual other costs (year 1) EUR/a 2,101 2,101

5045 Other costs - annual increase % p.a. 2.00% 2.00%

Fossil fuelled stand-by boiler / Fuel

Oil


41

Table 24: Outgoing Payments of the fossil-fueled Reference System

Property costs are not taken into consideration as the municipality of Bajina Bašta is the owner of the land as well as of the existing heating facilities, and is ready to rent it for free.



for 2019 from 2015

5053 Fossil fuelled reference systems' fuel cost

5054 Selected fuel type: Fuel Oil

5055 Fossil fuel price EUR/MWh 40.00 40 - 54

5056 Fossil fuel price escalation rate % p.a. 2.00% 2.00%

5057 Annual fossil fuel costs (theoretically; in year 1, at 100% grid expansion) EUR/a 117,333

5059 Electricity Costs

5060 Annual electricity costs (theoretically; in year 1, at 100% grid expansion) EUR/a 1,496

5062 Staff Costs (excl. R&M)

5063 Total person years of staff required Person-years 0.19 0.23

5064 Annual Staff Costs (in year 1) EUR 969

5066 Repair- and Maintenance Costs (R&M) according to VDI Guideline 2067

5067 Annual R&M costs in % of total investment % 1.94% 1.94%

5068 Repair- & Maintenance costs (year 1) EUR/a 400 400

5069 Repair- & Maintenance costs - annual increase % p.a. 2.00% 2.00%

5071 Property Costs

5072 Annual property costs / rent / lease EUR/a -

5073 Annual property costs increase % p.a. 2.00%

5075 Other annual costs

5076

Other annual cost (e.g. Insurance, office related cost, etc.) considered as fraction of

the total investment %

0.50% 0.50%

5077 Annual other costs (year 1) EUR/a 103 103

5078 Other costs - annual increase % p.a. 2.00% 2.00%

This section summarizes parameters that are specific to the fossil fuelled reference system. (Most parameters are adopted from the

biomass system section above, e.g. electricity-, staff and property cost parameters).


42

Economics

Table 25: Financing of the Biomass Heating System

The calculated investment (see line 6016) is higher than the initial physical investment (see line 6009), since here the payment time of investments is considered by its net present value including replacement investments.

Table 26: Financing of the fossil-fueled Reference System



6007 Investment Capital Structure


6009 Total investment eligible for subsidy EUR 257,000 91.7%

6010

Investment subsidy share (of eligible investment) - if any

subsidies are provided%

30.0%

6011 Investment Subsidy (nominal) EUR 0

6012 Investment subsidy payment year year - < 6

6014


total investment minus subsidy)%

30.00% 30.0%

6016 Total calculatory investment (present value) EUR 426,933

6017 Investment Subsidy (present value) EUR 0

6018 Equity Capital EUR 128,000 128,080

6019

Debt Capital (long-term) --> Pls. press the button to re-

calculate EUR 298,933

6021 Debt Captial Conditions

6022 Long term Loan - effective interest rate (after tax) % p.a. 2.13%

6023 Long term Loan - lent term a 10 15

6024 Long term Loan - effective interest rate (pre-tax) % p.a. 2.50% 3.00%

6025 Long term Loan - annuity (interest + redemption) EUR/a 34,156

6030 Equity Capital Conditions

6031 Cost of equity Capital (interest rate) - after tax % p.a. 5.00% 5-8%

6032 Tax rate % p.a. 15.00% 25.00%

6033 Cost of Equity Capital (interest rate) - pre-tax % p.a. 5.88%

6035 WACC pre-tax % p.a. 3.51%


0.0%

30.0%

70.0%

Investment Subsidy(present value)

Equity CapitalqDebt Captial

6038


6043 Capital Structure

6044 Total calculatory investment (present value) EUR 79,302


6046


total investment minus subsidy) % 30.00% 30.00%

6047 Equity Capital EUR 23,791

6048 Debt Capital (long-term) EUR 55,511

6050 Debt Captial Conditions

6052 Long term Loan - effective interest rate (after tax) % p.a. 2.13%

6053 Long term Loan - effective interest rate (pre-tax) % p.a. 2.50% 2.50%

6054 Long term Loan - lent term a 7 10

6055 Long term Loan - annuity (interest + redemption) EUR/a 8,743

6057 Equity Capital Conditions

6058 Cost of equity Capital (interest rate) - after tax % p.a. 5.00% 5.00%

6059 Cost of Equity Capital (interest rate) - pre-tax % p.a. 5.88%

6061 WACC pre-tax % 3.51%

Economic parameters for the fossil fuelled reference system. All parameters not specifically mentioned

here are assumed to be similar to those of the biomass heat project.


Fossil Fuelled Reference System

30%

70%

Equity Capital

Debt Capital(long-term)


43

Results of the Profitability Calculation

Table 27: Profitability Calculation of the Biomass Heating System and the fossil-fueled Reference System

7004 Economic efficiency - results of the profitability calculation using the discounted cash-flow method

Biomass Heating System Fossil Fuelled Reference System

7006 Selected fuel type: Wood Chips & Fuel Oil Selected fuel type: Fuel Oil

7008 Technical Parameters

7009 1.120 MW 1.120 MW

7010 0.700 MW 1.500 MW

7011 0.750 MW

7012 2,900 m 2,900 m

7013 1,870.0 MWh/a 1,870.0 MWh/a

7015 Investment (excl. VAT)

7016 Total initial investment (year 0-3) 280,160 EUR Total initial investment (year 0-3) 20,600 EUR

7017 Surplus investment year 0-3 259,560 EUR 1,260.0 %

7018 Thereof investment subsidy (if any) 0 EUR

7019 0.0 %

7021 Figure(s): Shares of initial investment components

7031 Effect of the bioheat plant on annual fuel and total outgoing payments

7032 15.6 EUR/MWh Fuel price (NCV, year 1) 40.0 EUR/MWh

7033 68,546 EUR/a 54.0 %

7035 32,614 EUR/a 23.5 %

7038 Discounted Cash-flow analysis (based on VDI Guideline 2067) - Assumptions overview

7039 5.88 % 5.88 %

7040 2.50 % 2.50 %

7041 Tax rate 15.0 % Tax rate 15.0 %

7042 50.30 EUR/MWhsold 50.30 EUR/MWhsold

7043 Calculated service life (t) 25 a Calculated service life (t) 25 a




7048 55,932 EUR -490,953 EUR

7049 8.66 % #ZAHL! %



7053 2,649.3 MWh/a 90.3 %

7054 798.2 t CO 2-eq/a 89.2 %

7055 -84.4 MWh/a -2.9 %



Fuel price (NCV, year 1)

Saving of outgoing fuel payments (year 4)

Saving of total outgoing payments (year 4)

Saving compared to fossil fuelled Ref-System

Saving compared to fossil fuelled Ref-System

Surplus inv. compared to fossil fuelled Ref-System

Max. peak load to be covered by the heat plant

Total nominal biomass boiler capacity

Fossil fuelled peak/back-up boiler capacity

Heating Grid - Trass/trench length

Annually sold heat amount

Max. peak load to be covered by the heat plant

Fossil fuelled boilers' total installed nominal heat

capacity

Annually sold heat amount


Cost of Equity Capital (interest rate) - pre-tax

Long term Loan - effective interest rate (pre-tax)

Average heat sales price (excl. VAT), in year 1

Cost of Equity Capital (interest rate) - pre-tax

Long term Loan - effective interest rate (pre-tax)

Average heat sales price (excl. VAT), in year 1

Heating Grid - Trass/trench length

Surplus investment cost covered by subsidy












0%

50%

42%

5% 3% Heating grid investment (100% grid expansion)


cleaning equipment (the latter if required).

Boiler house, fuel storage and boiler related electric, hydraulic and steelwork installations

Other initial Investment

0%0%

97%

0%3%

-20,000

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

20

18

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

Ne

t P

rese

nt

Va

lue

(N

PV

, a

t

serv

ice

lif

e/c

ap

ita

l co

st

ch

ose

n)

(EU

R)

-600,000

-500,000

-400,000

-300,000

-200,000

-100,000

-

100,000

20

18

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

Ne

t P

rese

nt

Valu

e (

NP

V, a

t

serv

ice

lif

e/c

ap

ita

l co

st

ch

ose

n)

(EU

R)

q


44

The following figures show the development of the outgoing payments over the calculated service lifetime of 25 years and the shares of the components of the outgoing payments for the fourth year of operation in 2023.

Figure 11: Overview on Amount and Shares of Outgoing Payments and Receipts (Revenues)

The heat sales price is 50.3 EUR/MWh (excl. VAT) in 2019 and increases by 2% p.a. That means that incoming payments (see receipts above) are exactly the same for both systems.

The last figure shows, in the manner of a sensitivity analysis, the influence of a change of the calculated service lifetime (see line 7126, here 20 years are assumed) on the Net Present Value (NPV), the Internal Rate of Return (IRR) and the Heat Generation Cost for both systems. In all tables above the calculated service lifetime was 25 years.

7070 Figure(s): Development of outgoing payments (operating and capital expenditures) for a calculated service life of 25 years

Outgoing Payments Outgoing Payments (EUR)

Biomass Fuel Costs

Fossil Fuel Costs

Electricity Costs

Property Costs

Staff Costs (excl. R&M)

Repair- and Maintenance Costs (R&M) according to VDI Guideline 2067

Other annual costs

Capital expenditures (interest & redemption payments)

7090

7108 Figure(s): Development of the receipts for a calculated service life of 25 years

Incoming payments Incoming payments (EUR)

Receipts from heat sales


Figure(s): Share of outgoing payments (Opex and Capex) in year 4 (full capacity operation) for a calculated service life of 25 years

0

50,000

100,000

150,000

200,000

20

18

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

Inco

min

g p

ay

me

nts

(EU

R)

Receipts from heat sales Other Receipts (if any)

0

50,000

100,000

150,000

200,000

20

18

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

Inco

min

g p

ay

me

nts

(E

UR

)

Receipts from heat sales Other Receipts (if any)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,0002

01

8

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

Ou

tgo

ing

Pay

me

nts

(E

UR

)

Biomass Fuel Costs Fossil Fuel Costs

Electricity Costs Property Costs

Staff Costs (excl. R&M) Repair- and Maintenance Costs (R&M) according to VDI Guideline 2067

Other annual costs Capital expenditures (interest & redemption payments)

0

50,000

100,000

150,000

200,000

250,000

20

18

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

Ou

tgo

ing

Pa

ym

en

ts (

EU

R)

44%

12%3%0%1%

6%

2%

32%

92%

1%0%1%0%0% 6%

Biomass Fuel Costs Fossil Fuel Costs

Electricity Costs Property Costs

Staff Costs (excl. R&M) Repair- and Maintenance Costs (R&M) according to VDI Guideline 2067

Other annual costs Capital expenditures (interest & redemption payments)


45

Figure 12: Influence of a reduced Service Life of 20 years on the Economic Assessment

7122 Influence of the calculated service life on the results

Biomass Heating System Fossil Fuelled Reference System

712520 a 20 a

7126144,633 EUR -376,649 EUR

71279.60% #ZAHL!

7128 44.71 EUR/MWh 64.87 EUR/MWhCalculatory Heat Generation CostCalculatory Heat Generation Cost

Internal Rate of Return (IRR, at service life/net cash

inflows chosen)

Internal Rate of Return (IRR, at service life/net cash

inflows chosen)

Net Present Value (NPV, at service life/capital cost

chosen)

Calculated service life t (10-25 yrs) Calculated service life t (10-25 yrs)

Net Present Value (NPV, at service life/capital cost

chosen)


46

Annex II – The B4B BioHeat Profitability Calculator

The B4B BioHeat Profitability Calculator (Excel-Tool) is downloadable from the www.bioheat4business.eu/-services website since August 2016.

The B4B BioHeat Profitability Calculator can be used for a comparison of the economic efficiency (pre-feasibility level) of mid-scale, solid biomass and fossil fuel fired (district & in-house) heat-only plants (in nine languages). The excel-tool can be used to compare a fossil-fueled reference system and a biomass-fueled system using a discounted cash-flow analysis based on VDI Guideline 2067.

Furthermore, the calculator contains country-specific reference values for investment (of various plant components) and for outgoing and incoming payments (price base 2015 of twelve countries). Scopes of this Excel-tool are biomass heating plants with and without district heating networks, in a capacity range from 0.1 to 20 MW. Default values are given within this capacity bandwidth only.

The Excel tool consists of six data input sheets and one data output sheet (results). To start the calculation procedure, fill in the Excel-sheets from left to right in the given order. Input sheets are organized as lists, each parameter has one row. In the left column (next to the input parameter name) you will find a link to the corres-ponding manual entry. In the column "Input Value", you will find dark blue cells where the correct values for your project need to be typed in. To provide some guidance on plausible parameter values, you will find estimated reference values or typical value ranges in the column "Reference Value". These values are based on a national survey conducted in the year 2015 by the Bioenergy4Business project partners. All cost related reference values are increased by means of the inflation rate. This cost increase is calculated automatically, based on the year you chose to be the start year of your project (see below). In some cases you will also find reference values for capacities, technical parameters etc. Please note that all these reference values serve as rough first estimates for plausible input/parameter values only. The real values, which you should take as input/parameter values for your specific project can deviate substantially from the reference values, based on local conditions.

Please note that the tool and the related national survey for reference parameter values have been prepared with meticulous care and to the best of our knowledge. For the sake of convenience, calculations assumptions had to be agreed on which might result in (slight) deviations from precise results. Furthermore, the results of this tool depend strongly on user inputs, such as heat demand assumptions and plant sizing parameters. Please note that an in depth heat demand inquiry is essential for the sizing of the plant components at optimal cost, and consequently has a strong impact on the feasibility of biomass heat projects.

This tool does not replace site specific planning by professionals and collecting several offers from manu-facturing companies. Hence, investment decisions cannot be based on the usage of this tool only.


47

Annex III – Techno-Economical Assessment of the biomass-based CHP Plant

Financing Parameters

Table 28: CHP Financing Parameters

Conversion Technology ORC

Financing parameters

Year of investment Ia 2018

calculated service life T y 12

Specific investment per kW electric (gross) Ispec 6,773

=> Investment I 880,490

Investment subsidy rate % 20

Subsidy Euro 176,098

Investment minus subsidy EUR 704,392

Equity capital share Eq % 30

Equity interest rate rEq % 5.88

Loan interest rate rLC % 2.5

Calculatory interest rate (WACC) after tax % 3.51

(Profit) tax rate % p.a. 15

Calculatory interest rate (WACC) pre tax rcalc % 4.13


48

Technical Parameters

Table 29: CHP Technical Parameters

Technical parameters

thermal input of the fuel Pwood MW 1.25

Installed nominal electrical power condensation-mode Pel kW 130

Electrical efficiency condensation-mode etael % 10.4

Electrical power CHP-mode Pel kW 130

Electrical efficiency CHP-mode (gross) etael % 10.4

Nominal thermal power CHP-mode Pth MW 0.63

Thermal efficiency CHP-mode (gross) etath % 50.4

Total efficiency CHP-mode (gross) etatotal % 60.8

annual fuel conversion efficiency rate to be achieved (gross) % over full year 60.8

Annual full-load hours (referring to fuel input) tFL h/a 7,100

thereof condensation mode tFL, cond h/a 0

thereof CHP mode tFL,CHP h/a 7,100

Amount of produced electricity (gross) MWh 923

Amount of produced heat (gross) MWh 4,473

Plant-own electrical consumption % of electrical power in CHP-mode 13.0

Plant-own electrical consumption MWh 120

Supply source of plant-own electricity demand Electricity self-supply

Self-supply of plant-own thermal demand (if any) % of heat prod. -

=> utilizable amount of electricity (net) MWh 803

=> utilizable amount of heat (net) MWh 4,473

=> electrical efficiency (net) % 9.0

=> thermal efficiency (net) % 50.4

=> total efficiency of CHP (net) % 59.4

Finally utilized/priced amount of electricity % of utilizable 100

Finally utilized/priced amount of heat % of utilizable 80

Amount of electricity utilized/priced MWh/a 803

Amount of heat utilized/priced MWh/a 3,578

Number of "effective" heat utilization full-load hours h/a 5,680

Fuel energy content of total biomass demand Lower heating value (LHV) MWh/a 8,875

Average heating value of the absolute dry wood mass LHV MWh/DM t 5.23

Average content of ash % per DM 1.50

Amount of biomass used Abs. Dry Mass t/a 1,697

Amount of accrued ash t/a 25

fuel conversion efficiency (excl. plant-own demand, net) % over full year 49.4%

fuel conversion efficiency (incl. plant-own demand, gross) % over full year 60.8%

IPCC emission factor of wood fuel t CO2e/MWh LHV 0.007

IPCC emission factor of electricity utilized (country-specific) t CO2e/MWhel 0.206

IPCC emission factor of heat utilized t CO2e/MWh 0.202

Estimated greenhouse gas reduction t CO2e/a 826

tech

nic

al a

bili

tya

ctu

ale

ne

ry u

tiliz

ati

on


49

Running Costs and Heat Revenues

Table 30: CHP Running Costs and Heat Revenues

Consumption-bound costs

Biomass fuel costs year 1 pFuel EUR/MWh LHV 15.60

price escalation rate of biomass fuel cost % p.a. 2.0

cost of ash disposal year 1 EUR/t 15

price escalation rate of ash disposal cost % p.a. 2

Price for electricity purchase year 1 Ct/kWh 6.0

price escalation rate of electricity purchase price % p.a. 2.0

costs of other operation material year 1 Cother % inv. Cost 0.75

price escalation rate of costs of other operation material % p.a. 2

Grid related charge for grid injection (if any) year 1 Cgrid Ct/kWhel -

price escalation rate of grid charge % p.a. 2.0

Biomass fuel costs year 1 Cbiom EUR 138,450

Ash disposal costs year 1 Cash EUR 382

Electricity procurement costs year 1 Cel EUR -

Other costs year 1 EUR 6,604

Grid charges year 1 Cgrid EUR -

Operation-related costs

Personnel requirement (full-time equivalents) Number p.a. 1.00

Personnel cost (full-time equivalents) Clabor Euro/a 10,000

price escalation rate of labor cost % p.a. 2.5

Maintenance & Repair costs Cmaint % of investment 3.0

price escalation rate of M&R costs % p.a. 2

Personnel costs year 1 Clabor Euro/a 10,000

M&R costs year 1 Euro/a 26,415

Other running costs

Insurance, administrative, other costs Ci&a % of investment 0.8

price escalation rate of insurance, administrative, other cost % p.a. 2

other costs Cother % of investment 0

price escalation rate of other costs % p.a. 2

Insurance and administrative costs, year 1 EUR/a 6,604

Other costs, year 1 EUR/a -

Heat revenues

opportunity costs of heat production (net heat revenue) year 1 OCheat Euro/MWh 41.7

price escalation rate of net heat revenue % p.a. 2.0

Net heat revenue year 1 Rheat Euro/a 149,342

Price escalation rate (%p.a.)I -

Biomass fuel costs Cbiom 2,0

Ash disposal costs Cash 2,0

Electricity procurement costs Cel 2,0

Other operating material costs Cres 2,0

Grid access charges Cgrid 2,0

Maintenance costs Cmaint 2,0

Labor costs Clabor 2,5

Insurance and administrative costs Ci&a 2,0

Other costs Cother 2,0

Ctotal

Heat revenues Rheat 2


50

Levelized Costs of Electricity

Table 31: Levelized Costs of Electricity

Figure 13: Levelized Costs of Electricity

Levelized Costs of Electricity (Cent/kWh)I 6.93

Biomass fuel costs Cbiom 19.09

Ash disposal costs Cash 0.05

Electricity procurement costs Cel 0.00

Other operating material costs Cres 0.91

Grid access charges Cgrid 0.00

Maintenance costs Cmaint 3.64

Labor costs Clabor 1.41

Insurance and administrative costs Ci&a 0.91

Other costs Cother 0.00

Ctotal 32.95

Heat revenues Rheat -20.59

Calculatory electricity production cost 12.36


51

References

Banjac M., Ramić B., Lilić D., Pantić A. (2015): Energy in Serbia 2013, Ministry of Energy and Mining. Accessed June 21, 2017, from http://mre.gov.rs/doc/efikasnost-izvori/Brosura%20Energija%20u%20Srbiji%202013_%20ENERGY%20IN%20SERBIA%202013.pdf

Radovanović V. (2017): Kostojevići – Bioenergy Village (in Serbian), presentation in Biovill Workshop, Bajina Bašta, May 23, 2017.

Aćimović R., Cukanović S. (2006): Study of District Heating Development in Bajina Bašta (in Serbian), Technics, Užice. Accessed June 21, 2017, from http://www.bbterm.rs/wp-content/uploads/2015/08/Studija-o-toplifikaciji-Bajine-Baste.pdf

Government of the Republic of Serbia (2015): Decree on Methodology for Determination of Heat Energy Price for Final Consumers, Official Gazette of the Republic of Serbia 63/15, Accessed June 21, 2017, from http://mre.gov.rs/doc/efikasnost-izvori/Metodologija_za_odredjivanje_cene.pdf

Đaković D., Gvozdenac Urošević B., Urošević D. (2015): Design of logistic concepts for wood biomass supply chains for district heating plants in municipalities of Priboj, Novi Pazar, Bajina Bašta and Nova Varoš. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, DKTI- Development of a Sustainable Bioenergy Market in Serbia, Accessed June 21, 2017, from http://www.bioenergy-serbia.rs/images/documents/studies/-BSCstudy_final.pdf

Conjić S. (2017): Survey of energy consumption in commercial sector in Kostojevići (in Serbian), internal report, BioVill project, 2017.

Austrian Energy Agency (2017): B4B Bioheat Profitability Assessment Tool, H2020 Bioenergy4Business project, Accessed August 24, 2017, from http://www.bioenergy4business.eu/bioheat-profitability-assessment-tool/

http://mre.gov.rs/doc/efikasnost-izvori/Brosura%20Energija%20u%20Srbiji%202013_%20ENERGY%20IN%20SERBIA%202013.pdf

http://mre.gov.rs/doc/efikasnost-izvori/Brosura%20Energija%20u%20Srbiji%202013_%20ENERGY%20IN%20SERBIA%202013.pdf

http://www.bbterm.rs/wp-content/uploads/2015/08/Studija-o-toplifikaciji-Bajine-Baste.pdf

http://www.bbterm.rs/wp-content/uploads/2015/08/Studija-o-toplifikaciji-Bajine-Baste.pdf

http://mre.gov.rs/doc/efikasnost-izvori/Metodologija_za_odredjivanje_cene.pdf

http://www.bioenergy-serbia.rs/images/documents/studies/BSCstudy_final.pdf

http://www.bioenergy-serbia.rs/images/documents/studies/BSCstudy_final.pdf

http://www.bioenergy4business.eu/bioheat-profitability-assessment-tool/

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