DEVELOPING A WOOD PELLET FUEL SECTOR IN SOUTH YORKSHIRE

Transcription

1 DEVELOPING A WOOD PELLET FUEL SECTOR IN SOUTH YORKSHIRE BY ANTON LEANDER SCHULLER September 2004 Carried Out For And On Behalf of CONNESS GmbH, Austria ECONERGY Ltd, Great Britain SOUTH YORKSHIRE FOREST Partnership, Great Britain Contact: Anton.Leander.Schuller@gmx.at

2 Abstract Heating with wood pellets, a renewable fuel, is seen as an environmental friendly alternative to fossil fuel heating. This study attempts to investigate current wood pellet production and supply in Great Britain and how the main barrier for wood pellet heating, a lack of a wood pellet supply chain, might be best overcome. Managers responsible for wood pellet trials in the region and wood pellet heating appliance producers are interested in the further expansion of wood pellet heating. A survey of existing wood pellet manufacturers showed that by the end of 2004 ten wood pellet mills will be in operation in the UK. An investigation in the import and supply of wood pellets showed that supply chain cost is an important factor in the entire wood pellet cost and that wood pellet produced locally brings lowest supply cost. Wood pellets from the Baltic countries are lower in price than UK produced pellets, although transported over long distances. Small scale wood pellet production at a production rate of 300 kg per hour has been found to be viable as long as cost free, high qualitative raw material for production is available. An investigation in the availability of wood processing by-products for pellet production in the Yorkshire and The Humber region showed that although wood is available, only a few companies are interested in disposing their waste for pellet production. It was found that wood pellets cannot compete in price with coal under current market conditions. For the future expansion of wood pellet heating it is recommended to support the setup of small scale wood pellet mills in order to supply the existing trial sites with low cost pellets. Domestic heating with wood pellets sourced form UK pellet manufacturers was found to be difficult due to a lack of pellets available to the Austrian pellet standard. Anton L. Schuller, August 2004 Page 2 of 134

3 Acknowledgements There are many people who contributed to this study in various ways which I would like to express my gratefulness: I would like to thank three organisations for giving me the opportunity to do this project in the area of renewable energy. Namely these are CONNESS GmbH from Graz, ECONERGY Ltd. from Cambridge and SOUTH YORKSHIRE FOREST PARTNERSHIP from Sheffield. Their initiative, guidance and financial support were invaluable for this work. Countless experts within the area of biomass, renewable energy and transport from countries such as Austria, Germany, Finland, Sweden, Russia, Lithuania, Italy, Ireland, the USA and the UK supported me with essential information; many thanks to them! Anton L. Schuller, August 2004 Page 3 of 134

4 Contact details The author would be pleased to receive comments or enquiries via or mail to the address: or the mail address: Loeffelbach 19, 8230 Hartberg, Austria. Anton L. Schuller, August 2004 Page 4 of 134

5 Table of contents Abstract... 2 Acknowledgements... 3 Contact details... 4 Table of contents... 5 List of figures... 7 List of tables Introduction Wood pellet trials in South Yorkshire Definition of the considered area Barriers to the expansion of wood pellet heating Aims and objectives of this study Overview of contemporary pellet technology Drivers for renewable energy Drivers for pellet heating Financial support for the use of pellet fuel in the UK Characteristics of wood pellets Contemporary pellet boiler technology Pellet production raw material Contemporary pellet production technology Contemporary pellet transport and storage modes Cost and energy consumption of pellet transport: Methodology Supply options and associated cost of pellets Wood pellet production in South Yorkshire Primary Research: Wood pellet supply and production Supply options and associated cost of pellets Wood pellet production in South Yorkshire Discussion of the outcomes Supply chain options and associated cost of pellets Small scale wood pellet production in South Yorkshire Pellet production sites in the UK Sources of raw material in the Yorkshire and The Humber region Wood pellet in SY for the use in converted coal boilers Wood pellets in SY for the use in domestic boilers Conclusions Recommendations and further work References Anton L. Schuller, August 2004 Page 5 of 134

6 Appendices I Pellet trials in South Yorkshire II Datasheet of the SPC PP300 compact, wood pellet mill III Small scale pellet production cost calculation for a SPC PP IV Business plan for small scale wood pellet production V Contact details of people and organisations VI UK pellet manufacturers VII Raw material availability in Yorkshire and The Humber Anton L. Schuller, August 2004 Page 6 of 134

7 List of figures Figure 1: The biomass cycle (Cox 2001) Figure 2: Soft wood pellets without bark (British BioGen 2004) Figure 3: Main characteristics of pellets (Alakangas and Paju 2002) Figure 4: Schematic diagram of a pellet stove (Fiedler F. 2003) Figure 5: Integrated pellet stove (Rika 2004) Figure 6: Pellet boiler with automatic screw feed system (KWB 2004)...23 Figure 7: Underfed stoker in coal boilers (Durham County Council 2003) Figure 8: Main steps of pellet production (Alakangas and Paju 2002)...27 Figure 9: Pneumatic blowing lorry (Durham County Council 2003) Figure 10: Wood pellet supply chain: Import from overseas Figure 11: Wood pellet supply chain: Import from within GB Figure 12: Wood pellet supply chain: Transport from local production Figure 13: Production cost caused by each step or cost factors of the pellet production process (Thek and Obernberger 2001) Figure 14: Influence of different parameters on the total pellet production costs of a pellet plant (Thek and Obernberger 2004)...49 Figure 15: Sensibility analyses comparing heating at Kirk Balk School Figure 16: Sensibility analysis comparing fuel prices for domestic heating including 5% VAT Figure 17: Datasheet SPC PP300, technical data (SPC 2004) Figure 18: Datasheet SPC PP300, mill arrangement (SPC 2004) Figure 19: Map of current pellet production sites, harbours and trial site Figure 20: Bagging unit for sawdust at Arnold Laver Ltd Anton L. Schuller, August 2004 Page 7 of 134

8 List of tables Table 1: Comparison of wood pellet standards Table 2: Likely wood pellet transport chains and involved costs Table 3: Pellet production cost for SPC PP Table 4: Pellet sales revenue for SPC PP Table 5: Capital investment calculation for a SPC PP Table 6: Overall wood pellet demand at the four trial sites Table 7: Pellet production cost calculation Table 8: Pellet production revenue calculation Table 9: SPC PP300 investment cost calculation Table 10: Net present value calculation for a SPC PP Table 11: UK Pellet manufacturing companies and sites as for Table 12: Arnold Laver Ltd. wood processing by products Table 13: Askern UK wood processing by products Table 14: Wood processing companies in Yorkshire and The Humber Anton L. Schuller, August 2004 Page 8 of 134

9 1 Introduction Wood pellets, made from compressed wood, are nowadays used in several European countries such as Sweden, Finland, Germany and Austria as a fuel for heating individual households or community buildings in stoves or central heating boilers. Although the technology for small scale heating in domestic homes, medium scale heating for larger buildings and large scale heating for district heating is nowadays available also in Great Britain, less than 100 (Cotton 2002) wood pellet boilers and stoves were in operation in this country in This project about the development of the wood pellet fuel sector in South Yorkshire (SY) was instigated by an Austrian based company called CONNESS GmbH, located in Graz (Ettl and Lesch 2004). Conness is the sales agency for the Austrian wood pellet boiler manufacturing company KWB (KWB 2004) for the market of the United Kingdom. In order to sell KWB boilers to the UK market, it is in the interest of Conness to increase the demand for these boilers. The company responsible for the sale of KWB boilers in the UK is ECONERGY Ltd., a Bedfordshire based company. Robert Rippengal, (Rippengal 2004) the commercial director of Econergy, sees a potential of wood pellet heating in SY and therefore initiated the contact to South Yorkshire Forest Partnership (SYFP). Robin Ridley from SYFP, the third party involved in the work, sees also a great potential for wood pellet heating in the area and was therefore interested in this collaboration. Wood pellets, one form of biomass, are seen as one main type of renewable energy for the future. Biomass produces significantly less atmospheric pollution than fossil fuels and no C0 2, a major greenhouse gas. Due to the plant uptake of C0 2 from the atmosphere, biomass is in the long term a C0 2 neutral source of energy. It is a local source of energy, and therefore reduces the dependency of the western consumer countries on a small number of fossil energy producers around the globe. Wood pellets, which are sourced locally, reduce the need of transporting fuel over long distances and increases the added value for local wood and wood waste. Anton L. Schuller, August 2004 Page 9 of 134

10 Stimulated in particular by the wider policy drivers to reduce CO 2 emissions, the UK now has a comprehensive fiscal and regulatory framework to support renewables generally and heating from wood (including pellets) in particular. These include: Capital grants (Bio-energy Capital Grant Scheme, Clear-Skies) Enhanced Capital Allowances Climate Change Levy on most fossil fuels Against this background a number of organisations, primarily private companies, have been working to promote heating with wood pellets (British Pellet Club 2004). Although numbers are still small, pellet boilers in the range of 50 kw to 500 kw (new and modified coal boilers) have been installed at a number of sites, with the public sector taking a lead by, for example, installing boilers in schools or other local authority buildings. Various barriers (mentioned in more detail later in the introduction) delay a further expansion of wood pellet heating appliances for domestic homes. In particular the lack of established suppliers and of effective distribution networks deters the decision makers of investing in the new technology. By the use of pellets for heating in public buildings, the advocates of pellet heating hope to being able to initiate a wood pellet supply chain, which will eventually make pellets also available to the private households and other users at an affordable price. One of these initiatives was started in South Yorkshire. 1.1 Wood pellet trials in South Yorkshire In the area of South Yorkshire and Nottinghamshire, some innovative energy managers tried to find ways of substituting coal as a fuel with pellets, especially for public buildings such as schools or council buildings. For Barnsley Metropolitan Borough Council (Barnsley MBC), a committed energy manager started together with an officer from South Yorkshire Forest Partnership (SYFP) to evaluate the potential of replacing coal by wood pellets. Coal boilers in the power range of 500 kw and more at some of their public buildings were modified for the use with wood pellets. Modifications included changes in the feed system to the boiler, additional air supply to the boiler, an anti-burn back device and slight modifications of the coal bunker (Smith 2003, Bradford 2004, Ridley 2004). Although the trials were technically seen a success (higher efficiency and still same power rating), it was necessary to support the cost for the fuel with grants from Anton L. Schuller, August 2004 Page 10 of 134

11 SYFP. The price for coal at the trial sites was around 67 per tonne and the price for wood pellets around 110 per tonne (Bradford 2004). Although the price for pellets at these sites is higher than the price for coal, other advantages of pellet heating migh support Mr. Bradford s initiative: A higher efficiency of the pellet boiler, reduced maintenance cost, lower attentance time of a caretatke and no disposal cost for the remainings of the combustion. All these factors make pellet heating more attractive. To use pellets which are competitive in price to coal, the maximum price per tonne of wood pellet would have to be 47. As soon as the grant for these trials is used up, the sites may have to change back to coal. The involved parties are therefore interested in the pricing of pellets in future and whether locally produced pellets might be available at a price competitive to coal, whereby it is important to include the cost saving factors which have been mentioned previously in the calculation. 1.2 Definition of the considered area Different geographical regions had to be defined prior the investigations, in order to address the requirements best. The core area considered in the context of assessing the potential for wood pellet production is in the area within a radius of 50 miles of Barnsley, although it is recognised that this would draw on a wider catchment for raw material supply, assumed for present purposes to be the Yorkshire and The Humber region. In the context of imports of pellets into the area to satisfy short-term demand, three potential sources were identified: 'Import' from elsewhere within Great Britain Import from Northern Ireland, elsewhere in Europe (e.g. Sweden or the Baltic countries) and Northern America 1.3 Barriers to the expansion of wood pellet heating Although wood pellets for heating are already used by a large number of households and public buildings in many European countries, it seems that there are still many market barriers that impede the development of wood pellet heating in the UK. These are, amongst other less influential ones, the following barriers: Lack of an established and reliable wood pellet supply chain Greater investment cost for new wood pellet heating equipment than for new oil or gas fired equipment Anton L. Schuller, August 2004 Page 11 of 134

12 Lack of public knowledge about pellet heating systems and their financial and environmental benefits as well as lack about financial incentives available Fuel storage space availability in urban areas (more storage room necessary for pellets than for e.g. oil) Gas and other fossil fuels are currently still cheaper than wood pellets which have to be transported over long distances Competition with other fuels from biomass such as wood chips All these factors are important and all of them need to be addressed in order to increase the use of wood pellets for heating. However, a reliable wood pellet supply chain is the basis for wood pellet supply in the region. Only after this pellet supply is established and the sources are reliable and sustained, can organisations start to promote the usefulness of wood pellet heating. Potential customers for wood pellet stoves and boilers will not risk the capital investment in the new technology without having the guarantee of being able to source wood pellet fuel at a competitive price in the long run. 1.4 Aims and objectives of this study The aim of this study is to investigate the development of the wood pellet market in South Yorkshire with a particular emphasis on looking at the availability and supply of wood pellets into the area of Barnsley. The study should help the project managers of current ongoing pellet trials to evaluate the potential of the further substitution of coal by wood as a fuel for water and space heating. By this work, people interested in the advanced use of pellets should get a detailed idea of the cost of pellets and the cost of transport involved in the import of pellets to Great Britain. The potential for setting up a small scale wood pellet mill in the area shall be evaluated as well as the amount of the raw material available for wood pellet production will also be indicated. The objectives are: Investigation in the current modes and variants of wood pellet transport within and into Great Britain and the associated cost for transport and storage. Evaluation of the cost factors influencing the price of imported pellets from overseas. Identification of the most economic transport mode of pellets in GB. Anton L. Schuller, August 2004 Page 12 of 134

13 Identification of the existence of sources of raw material for wood pellet production in the Yorkshire and The Humber area. Determination of current and future wood pellet production sites in Great Britain and their qualitative and quantitative potential. Preparation of a financial evaluation of a small scale wood pellet mill which could be set up in the area and determination of the main factors influencing the production cost of pellets. Anton L. Schuller, August 2004 Page 13 of 134

14 2 Overview of contemporary pellet technology This chapter summarises the research and investigations that were conducted prior the main study in order to establish the background framework for this work. Information on renewable energy, their usage and their environmental benefit are available from various kinds of sources. However, not that much information on wood pellets is available in Great Britain due to the fact that many forms of biomass in general and wood pellets in particular are quite new types of fuel in this country. Hence information was sourced not only from British sources but mainly from sources from European countries such as Sweden, Finland and Austria. The main types of information used in this study were: Published literature in electronic form from academic and non academic journals Proceedings from pellet conferences Published and non published literature drawn from the internet Face-to-face and telephone communication with project partners and experts within the pellet, timber and transport industry Books Governmental publications Feasibility studies conducted by renewable energy and biomass consultants An entire list of sources of information can be found in the reference list of this study. 2.1 Drivers for renewable energy Renewable energy as a term is used to describe those energy flows that occur naturally and repeatedly in the environment. These are basically sun, wind, oceans, plants and the fall of water (DTI 2004a). It also refers to the energy available from the fuel cell as long as the energy to charge the cell is sourced from renewable energy. Climate change in the earth's history occurred over long time, but acceleration in the last century has been seen initiated by the humankind's use of fossil fuels. The burning of fossil fuels releases greenhouse gases into the atmosphere which produce the enhanced greenhouse effect. Greenhouse gases occur naturally but their production and release to the environment has been exacerbated by human activity. Greenhouse gases include: water vapour, carbon dioxide, methane, nitrous Anton L. Schuller, August 2004 Page 14 of 134

15 oxides (NO X ), ozone (O 3 ), hydro fluorocarbons (HFCs), per fluorocarbons (PFCs), and sulphur hexafluoride (SF 6 ) (DTI 2004a). The effect of this increased concentration of greenhouse gases in the atmosphere is that more of the sun's energy is trapped in our atmosphere. Besides an increase of the average temperature on earth, it also heightens extremes of climate. The most severe impact of the climate change might be an anticipated rise in sea level. Measures against global warming were already initiated, but much more work still is to be done. The DTI (2003) Energy White Paper "Our energy future - creating a low carbon economy" is a good source of information about the policy of the UK government in order to tackle the problem. Predictions of climate change initiated by the effect of greenhouse gases are dramatic, with average temperature rise by up to 5.8ºK, and sea level rise by up to 88 cm by 2010 (Richardson 2003, IPCC 2000). These predictions are more severe than the first estimates one decade ago. If these predictions are correct, fast acting solutions are required. Member states of the European Union have committed to the reduction of greenhouse gases and Great Britain has agreed to reduce emissions of a basket of six greenhouse gases by 12.5% below 1990 levels by end of under the Kyoto Protocol (Richards 2003). Further the UK agreed to reduce CO 2 emissions by 20% by 2010 and has set a target of 10% of electricity to be produced from renewable sources, also up to Currently 3.86% of the electricity supply in the UK is sourced from renewable energy. By far the biggest amount of 2.03% comes from Hydroelectricity. Only 0.95% of the electricity in the UK comes from biomass. The Scottish Executive has set themselves a higher target of 18% of the electricity to be produced by renewable energy by Recent targets of greenhouse gas reduction set by the UK government go even further, they require that carbon dioxide emission should be reduced by around 60% by 2050 (DTI 2003, East Midlands Development Agency 2003). 2.2 Drivers for pellet heating Wood pellets consist of compressed wood, and are therefore one form of biomass. Biomass, also known as bio fuel or bio energy, is obtained from organic matter either directly from plants or indirectly from industrial, commercial, domestic or Anton L. Schuller, August 2004 Page 15 of 134

16 agricultural products (DTI 2004a). Unlike fossil fuels, biomass is a renewable form of energy, which means that it can be replaced over a short period of time. Unlike most forms of renewable energy, biomass is based on a fuel and can therefore address all 3 energy sectors which are electricity, transport fuels and heating & process fuels. Unlike wind and sun, biomass is also schedulable. This makes biomass much more flexible and makes biomass heating a key opportunity. The use of biomass such as wood pellets instead of fossil fuels has a huge potential for the reduction of greenhouse gas emissions. Burning fossil fuels removes carbon that is locked away underground and transfers it to the atmosphere in the form of CO 2. This means, burning fossil fuels creates a surplus of CO 2 in the atmosphere and therefore a carbon imbalance. In a combustion system such as a boiler, both biomass and fossil fuels release carbon dioxide into the atmosphere as they burn. But the main difference is that biomass also needs CO 2 to grow, which creates a "closed carbon cycle", where the same amount of carbon dioxide is absorbed from the atmosphere by the biomass plant as is released when the biomass is burnt (provided it is from a sustainable supply). Figure 1 shows the so called closed carbon dioxide cycle, which makes biomass "carbon dioxide neutral". This carbon cycle, like the water cycle, is a natural process. Using biomass for energy just intervenes in the loop and effectively liberates solar energy harnessed by photosynthesis. Anton L. Schuller, August 2004 Page 16 of 134

17 Figure 1: The biomass cycle (Cox 2001) "Bioenergy, 21st century fuel", a paper available on the homepage of British BioGen (2001), gives a good introduction into biofuel in the United Kingdom and discusses why we need renewable energy and biofuels. According to this document, biomass energy meets the needs of an evolving energy market in the UK by addressing four themes: Protection of the environment, economic growth, social equity and prudent use of natural resources. The increase of the use of biomass will in their opinion not only lead to a reduction of carbon dioxide in the atmosphere, but also create new employment opportunities, habitat improvement and a strengthening of local communities within the UK. The DTI forecasts on their homepage that by 2020 some jobs in the European Union (EU) will be created from Biomass alone (DTI 2004a). Biomass would also provide the UK with an independent energy source and is therefore a politically secure energy. Biomass reduces the reliance of the UK on energy imports from other countries. 2.3 Financial support for the use of pellet fuel in the UK The expansion of renewable energy seems to rely on financial incentives provided by the EU, the UK government and regional support programs. A list of eight UK incentive programs is included in Biofinance (2004). A good collection of Grants and Financial Support for wood pellets production and heating is also provided by Wood Energy Ltd. (2004) and East Midlands Development Agency (2003). Anton L. Schuller, August 2004 Page 17 of 134

18 Three programs, named "Clear Skies", "Bio-energy capital grant schemes" and "Enhanced Capital Allowance" seem to be the most important sources of aid, but also other programs are available. Enhanced Capital Allowance: Allows all registered biomass boilers under 300 kw a 100% capital tax write-off in the 1st year (for VAT registered persons and organisations). Clear Skies: Supports householders and community groups (including local authorities and non profit organisations). Support for households: 600 for pellet stoves and 50/kW for pellet boilers up to 30 kw. Support for communities: up to 50% of costs or up to 100,000. Bio-energy capital grant: Private purchaser and community groups can get 28% of the eligible costs. 2.4 Characteristics of wood pellets Wood pellets have a cylindrical shape and consist of compressed wood. The raw wood used for the production is usually a by-product or waste product from the mechanical wood processing industry. Mainly dry sawdust, shavings, cut-offs and wood chips from soft wood without bark are used. Figure 2 shows how pellets with a diameter of 6 mm (without bark) look like. Figure 2: Soft wood pellets without bark (British BioGen 2004) Figure 3 gives a brief overview of the average properties of pellets and a comparison to fossil fuels. Anton L. Schuller, August 2004 Page 18 of 134

19 Figure 3: Main characteristics of pellets (Alakangas and Paju 2002) The energy content of one cubic metre of loose pellets is approximately the same as for 315 litre of light fuel oil, but the energy content is almost four times higher than for one cubic meter of wood chips. To launch the new type of fuel in countries such as Austria or Sweden it was necessary to establish a minimum quality standard for wood pellets in order to give the consumer confidence in the fuel. This was not only to guarantee a minimum energy content of the bought pellets, but also to meet the technical requirements of the various automatic fired boilers. According to Alakangas and Paju (2002), the most important qualitative property of pellets is strength (mechanical durability) because small wood particles would cause problems in transport and combustion. Various countries have their own quality standards and requirements for wood pellets. A European standard for solid bio fuels covering also wood pellets (CEN TC335) is according to the European Committee for Standardisation (CEN 2004) currently under development. To be able to compare the different standards of wood pellets available on the market, the following table (Table 1) shows the most important parameters of wood pellets. Anton L. Schuller, August 2004 Page 19 of 134

20 Parameter Data source Origin Diameter Unit [mm] Austria: OENORM M 7135 EU: CEN TC 335, High Quality Standard, 6mm diameter (D06) Koskarti 2004 Alakangas 2003 Chemicallay untreated Wood or Bark 4 = diameter = 10 = 6 ± 0.5 USA: Pellet Fuel Institue (PFI), specification for premium pellets Pellet Fuel Institute 2004 Usually hardwood or softwood sawdust, no bark 6.35 (1/4") or 7.91 (5/16") UK: British BioGen, COGP for premium pellets, low ash content British BioGen < diameter = 20 =5xdiameter, max. 20% of pellets =5xdiameter 38.1(11/2") <5xdiameter Length [mm] 7x diameter Min. bulk density [kg/m3] (40lb/ft3) 600 Gross density [kg/dm3] Max. moisture content [%] wt Min. net calorific 16.9 (E4.7) 18 value [MJ/kg] (4.7 kwh/kg) Max. ash content [%] wt (A0.7) 1 1 Table 1: Comparison of wood pellet standards The quality of pellets is obviously of high importance for the consumer. It is essential to compare energy content and moisture content in order to evaluate the fuel for heating. But even more important is the quality of the pellets to guarantee a troublefree and smooth operation in the current pellet boilers. Although it is possible to feed modified coal boilers or wood chip boilers with a wide range of pellets according to different specifications, high sophisticated pellet stoves and pellet boilers in the smaller power range of up to 30 kw are specified for the usage with specific types of pellets. For pellets from the Austrian manufacturer KWB for example, only pellets according to the OENORM M 7135, diameter 6 mm, are allowed. Pellets including bark or pellets with a lower mechanical stability might cause problems in the feeding system (blocking of the system) and flue gas requirements might not be achieved. 2.5 Contemporary pellet boiler technology Information on wood pellet based heating systems is available from various kinds of sources. The internet mainly provides information posted by wood pellet boiler manufacturing companies. But also brand independent information is available. One good example is the presentation "The Current State Of Austrian Pellet Boiler Technology" by Obernberger and Thek (2002). This presentation is an introduction into the basics of wood pellet combustion technology. It describes the technology of feeding the pellets into the boiler, storage of the pellets both in the boiler itself and Anton L. Schuller, August 2004 Page 20 of 134

21 externally, the technology and importance of the burn-back protection, the basic burner principles and gives technical details about furnace geometry, materials, control systems and automatic ash removal systems. Fiedler, F. (2003) gives in his paper "The state of the art of small-scale pellet-based heating systems and relevant regulations in Sweden, Austria and Germany" also an introduction into the pellet boiler technology. But he concentrates in this paper on small scale burner technology and related regulations regarding emissions and pellets. In addition to other conclusions, Fiedler found in his investigations that Austrian small-scale boilers are more sophisticated than Swedish boilers, but also more expensive. Besides describing the advantages of wood pellets as a fuel, Strehler (1999) analysed in his paper "Technologies of wood combustion" the ease of handling for the wood pellet boiler user. He found that wood pellet furnaces allow similar comfort as oil fired boilers. Anton L. Schuller, August 2004 Page 21 of 134

22 Domestic appliances For the domestic application, two types of pellet heating systems are available: Pellet stoves and pellet boilers. A pellet stove needs electricity and wood pellets as an input into the stove and a flue as an output in order to lead flue gases out of the stove. Pellet stoves do not require a water circulation system because in most applications, the heat is exchanged with the surrounding room air by the means of an electrical fan blowing the surrounding air through the stove. Pellet stoves are automatically ignited and are usually refilled by hand with wood pellets sourced in the form of 25 kg bags. The nominal heat output of a stove is up to around 10 kw (Rika 2004). Figure 5 shows a modern stove and Figure 4 depicts the basic units of a pellets stove. Combustion air is sucked into the stove from the bottom left and flue gas emit from the stove pumped by a small air blower. Figure 4: Schematic diagram of a pellet stove (Fiedler F. 2003) Anton L. Schuller, August 2004 Page 22 of 134

23 Figure 5: Integrated pellet stove (Rika 2004) The second basic type of domestic heating unit, a pellet boiler, is of larger size than a pellet stove and operates at nominal heat output rates from 10 to 30 kw (KWB 2004). Pellet boilers in this size are for wet central heating. Small scale pellet boilers for domestic heating appliances are fully automatic operated and reloaded. The main principle of operation is that pellets are fed into the combustion chamber according to the current heating power demand by a motorized feed screw. The pellets are fired automatically by feeding pellets into the combustion chamber were a glowing glow plug ignites the pellets. Figure 6 depicts a pellet boiler for central water heating. The pellets are fed into the boiler via a screw feed system. Other systems available nowadays suck or blow the pellets from the pellet storage space into the pellet boiler. Figure 6: Pellet boiler with automatic screw feed system (KWB 2004) For non domestic applications such as for large scale community buildings (schools, prisons, council offices, etc.) and for community heating, large dedicated pellet Anton L. Schuller, August 2004 Page 23 of 134

24 boilers, heating containers and pellet burners integrated in modified fossil fuel boilers are used. Modified coal boilers Large scale fossil fuelled boilers such as oil or coal boilers might be converted into wood pellet fuelled boilers. According to Durham County Council (2003) and personal communication with Mr. Gerrity (Gerrity 2004), Durham's energy management unit converted existing coal boilers in the power range of 585 kw per boiler into pellet boilers. The boiler is underfed by a James Scott stoker modified for use with wood pellets (Figure 7). In the combustion chamber, the fire burns in a rectangular retort surrounded by tuyeres which direct the force draught primary air to the centre of the fire. Secondary air is supplied through specially drilled holes in the door over the fire. The wood pellets stored in a bunker are conveyed by a screw feed to the centre of the combustion chamber in the boiler. Figure 7: Underfed stoker in coal boilers (Durham County Council 2003) Heating containers Heating containers used for district heating, include a burner, flue gas cleaning equipment, district heat circulation pumps and necessary measuring equipment (Alakangas and Paju 2002). The big advantage of a pellet burner container is its transportability. The whole platform can easily be transported from one site of application to another. At a new site it is only necessary to connect the heating container to heat water pipes, electricity supply and pellet storage in order to start heat production and heat supply. Anton L. Schuller, August 2004 Page 24 of 134

25 Co-firing Wood pellets can also be co-combusted with coal in coal fired pulverized combustion boilers. The co-combustion of wood pellets in power utilities was mainly encouraged by Renewables Obligations on fossil fuels burned. Such taxes on carbon dioxide, emitted by fossil combustion, should reduce the emission of green house gases by the use of renewable energy sources such as biomass. According to Alakangas and Paju (2002), in coal fired power stations the pellets are crashed together with the coal in the existing coal mills prior combustion in the pulverized combustion boiler. In their report Alakangas and Paju (2002) have also investigated in one co-combustion trial in Finland, where coal was replaced by % weight pellets. 2.6 Pellet production raw material The most common raw materials for pellet production are shavings, saw dust and wood chips from soft wood. These by-products from the timber processing industry are usually dry, and therefore do not need any further dehydration. Although pure, dry (moisture<15% wt) and screened sawdust is the ideal raw material for wood pellet production, also wet wood (around 50% wt moisture) (Asplan et al. 2000) and even virgin wood could be used theoretically. Wet wood processing by-products are for example sawdust and bark which are accumulated during processing of 'fresh' wood. In some countries, wood pellets are also made from virgin wood or from especially grown energy wood species such as Short Rotation Coppice (SRC). Prior to pellet production process from wet raw material, it is necessary to dry the wood moisture content down to around 15% which requires a substantive amount of heat energy. If wood pellets without bark are required, it is additionally necessary to separate the bark from the wood prior chipping or pellet production. Wood pellets including bark are darker, have a higher energy content, the ash content is higher and are mainly used for co-firing in power stations (Colquitt 2004). Pellets including bark are not suitable for use in many dedicated small pellet appliances due to their higher ash content. Basically, for the production of pellets from wet or virgin wood material the following process steps are required additionally in comparison to pellet production from dry wood: Drying of the wood to approximately 15% wt moisture Anton L. Schuller, August 2004 Page 25 of 134

26 Separation of the bark prior pellet production for bark free pellets Chipping of the logs to the maximum size allowed for the mill A more detailed description of the cost involved in the production of pellets from virgin or wet raw material can be found in the main part of this work. 2.7 Contemporary pellet production technology Pellets are currently produced in several countries throughout the world. Leading pellet manufacturing countries are the USA, Canada, Russia, Baltic countries, Finland or Austria. Pellets might be produced in small scale mills from 300 kg per hour up to production rates of 20,000 kg per hour and even more. Although the size and capacity of the various mills vary, the basic production steps are similar. According to different sources such as Alakangas and Paju (2002), Asplan et al. (2000) or Thek and Obernberger (2001), the basic steps involved in the production include: (See also Figure 8) Drying: This is only needed if the moisture content of the raw material is above a certain level of approximately 10-15%. For by products of the timber processing industry as a raw material, drying is usually not necessary. Milling: The material is ground to a size not larger than the diameter of the pellets, but usually around 3 mm. However, a high percentage of very fine dust might lead to problems in the pellet production process because of the absence of longer particle to bind the pellets. Usually hammer mills are used for grinding. Conditioning: The raw material is conditioned with dry steam and water to activate the lignin in the wood as a binding agent in order to bind the wood particles together. Pressing: Pellets are compressed in flat-die or vertical mounted ring-die. During pressing, the pellets are bound by the cohesion of inner surfaces and adhesion caused by lignin (Alakangas and Paju 2002). Cooling: After the pressing stage, the pellets have to cool down from around 90 C to a temperature of about 25 C where the mechanical stability of the pellets is much higher than in the hot condition. Screening: The pellets must be separated from the raw material dust which is then led back into the pellet production process. After screening, the pellets are conveyed to a storage space or backed into large or small bags. Anton L. Schuller, August 2004 Page 26 of 134

27 Figure 8: Main steps of pellet production (Alakangas and Paju 2002) 2.8 Contemporary pellet transport and storage modes Transport is seen as a very important factor not only concerning quality of the delivered pellets but also the economy of the whole pellet industry itself. Pellets are transported nowadays within a small area, where both production facility and consumer are located, but also over very long distanced from areas such as Russia or Canada to the harbour of Rotterdam, to Swedish ports or also to British ports. According to authors such as Alakangas and Paju (2002) or Asplan et al. (2000), pellets are usually transported in three different ways: In small bags, in large bags and in bulk. Small bags are typically in the size of around 20 kg and are packed onto interchangeable pallets. The pallets are delivered to the retailer, who then delivers the bags to the consumer. Large bags contain around 500 to 1000 kg. Pellets in large bags are transported more economical, but a forklift truck, crane or front loader is required to unloading the bags from the truck. The bags are usually recyclable. Pellets can also be transported by lorries or articulated lorries with walking floor, blowing system or tip-off equipment from a harbour, a production facility or a storage space to either, the intermediate store, the wholesalers or the consumers. The last step in the transport chain of bulk pellets to the consumer is most likely performed by a lorry with blowing equipment which blows the pellets from the lorry via pipes into the storage room. Figure 9 shows a picture of an animal feed lorry used to transport and blow the pellets into the storage space at the consumer. Anton L. Schuller, August 2004 Page 27 of 134

28 Figure 9: Pneumatic blowing lorry (Durham County Council 2003) Due to the low moisture content of wood pellets, the storage modes can influence the quality of the pellets significantly. General information about the storage of pellets is given by authors such as Alakangas and Paju (2002) or Asplan et al. (2000). According to them, it is important to store pellets in a dry space to prevent them from coming into contact with water or water drops. Moisture and water problems should not only be considered during the storage of pellets but also during the transport of pellets from one place to another place, especially when pellets are transported on sea. At the manufacturing site, the wholesaler, the importer or the retailer, the pellets are stored in silos, closed halls or buildings with fly roof (Asplan et al. 2000). Silos and closed halls are considered as the better means of pellet storage due to the better protection against moisture and water. Depending on the amount at the customer, the pellets are stored mainly in bunkers or silos. Some general requirements on storage bunkers and silos are explained in more detail in Asplan et al. (2000). Lehikangas (1999) conducted a general research study on the effects of the storage of pellets made from sawdust. Especially temperature and fungal growth in pellet piles depending on the moisture content of the pellets had been investigated. He found that pellets made of fresh logging residues had the lowest durability during storage. In general he found that the change in pellet quality stored in large bags was not significant, but notable. Anton L. Schuller, August 2004 Page 28 of 134

29 2.9 Cost and energy consumption of pellet transport: The costs involved in the transport of biomass are very important in considering transporting biomass over longer distances. Biomass is a renewable energy and also promoted as such one to the consumer. The fossil energy consumed by the transport mode as well as the environmental effects caused by the transport of pellets are important inputs in considering the environmental 'friendliness' of pellet heating. Such an analysis of cost and energy consumption associated with long distance Bioenergy transport is provided by Suurs (2002). Ship, road and rail transport were considered. High density energy carriers such as pellets were found to be the most attractive mode of transport for Bioenergy. Rakos and Tretter (2002) compared the environmental influences of three different modes of heating for a 400 kw boiler: An oil boiler, a gas boiler and a pellet boiler were compared. It showed that gas has the lowest emissions of SO 2, wood pellets the lowest of CO 2 and CO. Especially interesting is a comparison of the overall greenhouse gas emissions of pellet transport from different areas to the boiler. It showed that the emission of CO 2 equivalent greenhouse gases of pellets combustion is only 10% of them of oil combustion, although the pellets were imported over a very long distance from a port in Sweden to the consumer in Vienna. Anton L. Schuller, August 2004 Page 29 of 134

30 3 Methodology In order to investigate the wood pellet market in South Yorkshire and find out how to best supply wood pellets to the area of the trial sites near Barnsley, the following steps were necessary: Identification of the main wood pellet supply options and associated cost Evaluation of the economical viability of small scale wood pellet production in the area 3.1 Supply options and associated cost of pellets In order to investigate the wood pellet supply to the trial site area in SY it was necessary to design a model which describes the flow of the wood pellets from the manufacturer to the consumer. The basic steps and transport modes involved in this model are: : Direction of the pellets moved : Initial, final or preliminary store of pellets : Mode of transport between different pellet stores Definition of sources of pellets: The counties which are currently producing and exporting pellets had to be defined by making a research on current wood pellet producers by the use of journals on biomass, internet homepages and questioning experts. In order to identify the current pellet producers in Great Britain, information from British Bioenergy sources such as British BioGen (2004) or British Pellet Club (2004) as well as advice and information from personal communication with knowledgeable people in the field, was used. Due to both, the unreliability of the information and the age of the data, a detailed telephone survey, questioning all the manufacturers, was necessary. Address information as well as information on annual production rate, pellet size, pellet quality, ex works price of the pellets and whether the pellets would be available for heating or not, were gathered. Anton L. Schuller, August 2004 Page 30 of 134

31 Definition of customers of pellets: For this study it was assumed that the different types of customers are best segmented by their pellet storage room characteristics. The main modes of storage for pellets in South Yorkshire in future would be: Storage in bunkers or silos capable of holding more than 25 tonnes of pellets delivered in bulk. Storage in bunkers or silos capable of holding less than 25 tonnes of pellets delivered in bulk. Storage of pellets in small bags of 20 kg (mainly for the heating of pellets in stoves) delivered in small bags Storage of pellets in large bags of 1000 kg delivered in large bags Definition of modes of transport In order to cover the different modes of transport within the wood pellet transport chain, the following different types of transport were defined based on material available on pellet transport (Alakangas 2003, Alakangas and Paju 2002, Suurs 2002). See transport Long distance land transport to consumer Long distance land transport to intermediate Short distance land transport, maximum weight Short distance land transport, light weight Short distance small bag transport Long distance transport lorry large bag Short distance lorry large bag Selection of five most likely transport chains and involved cost In order to compare the different basic options of pellet supply, five most likely supply chain scenarios have been chosen. Basis for this selection was that wood pellets in balk are likely to be the first required type of pellets and that these are already required at the trial sites. Two examples of pellet import from overseas chosen (Example 1 and 2) compare pellets imported from a Baltic country with pellets imported from Northern Ireland, both seen to be potential pellet suppliers in future. Example 3 and example 4 compare two different variants of import of pellets from production sites in South Wales, one including an intermediate store. Example Anton L. Schuller, August 2004 Page 31 of 134

32 5 finally shows the steps and cost involved in the short distance transport from a production site to the consumer. Sales people from production sites, transport companies, pellet importers and knowledgeable people in the biomass sector were questioned and asked for current prices and offers. To compare the cost of pellets including pellet price and cost initiated by the transport chain were than calculated for the commercial user and the private household. 3.2 Wood pellet production in South Yorkshire In order to find out whether small scale wood pellet production is viable, three basic steps were necessary: An investigation in the factors influencing the cost of wood pellet production, an evaluation on the availability of raw material for production and an economical evaluation of pellet production. Data and findings from investigations in existing wood pellet production sites in Austria were used for this. In order to evaluate the extent of raw material available for pellet production, a list of timber processing companies was generated. Out of this list, nine companies were selected and questioned in a telephone questionnaire according waste material availability. For the calculation of the wood pellet production cost and the capital investment cost, the following steps were carried out: Request of an offer for a small scale pellet mill Evaluation of pellet mill datasheet Questioning of knowledgeable people within the pellet production business Anton L. Schuller, August 2004 Page 32 of 134

33 4 Primary Research: Wood pellet supply and production In the introduction it was found that the lack of a reliable, proven and cost-effective supply chains is the main barrier to a further expansion of wood pellet heating within the UK. To overcome this barrier it was further found that two things can be done in order to make pellets available: 1. Import pellets from outside the region or even outside the UK to the consumer in South Yorkshire 2. Start wood pellet production in close proximity to the consumers in the area The following two sub-chapters, wood pellet transport and small scale wood pellet production, examine the solutions in more detail. 4.1 Supply options and associated cost of pellets In order to understand the supply of wood pellets and in order to understand the current influence of transport cost on the wood pellet fuel cost as a first step, it is necessary to analyse and review the possible transport chains involved. As a second step, the most probable and realistic scenarios will be analysed on the basis of the cost involved in wood pellet supply Review of supply chains Figure 10, Figure 11 and Figure 12 depict three basic methods of getting wood pellets from the manufacturer to the consumer in South Yorkshire. Figure 10 describes the import of wood pellets from overseas. Figure 11 describes the transport of wood pellets from within Great Britain over distances greater than 50 miles to the customer. The possible scenarios of transport from a local production site to the customer is depicted in Figure 12. The supply chain of pellets can be seen as a flow of wood fuel from the production site region (overseas, UK and local) to the four different basic types of consumers (large bunker, small bunker, large bag, small bag). Because of the large number of possible variants of transport, not all but only the sensible variants are depicted and discussed. The arrows indicate the flow of the pellets, the grey boxes show the mode of transport and the white boxes show the stations of pellet production, pellet storage or pellet consumption. Anton L. Schuller, August 2004 Page 33 of 134