Resource Assessment for County Sligo. Sligo Fuel Resource Survey and Biomass Demand

Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012

SWEDEN ICELAND FAROE ISLANDS NORWAY FINLAND SCOTLAND Western Region NORTHERN IRELAND DENMARK IRELAND UNITED KINGDOWM What is RASLRES? RASLRES (Regional Approaches to Stimulating Renewable Energy Solutions) is an EU bioenergy project led by the WDC and funded under the Northern Periphery Programme of INTERREG IVB. The total project budget is 2.8 million over three years. Commencing in September 2009, RASLRES aims to increase the uptake of locally produced bioenergy solutions through the development and implementation of market development models. The project focus is on pilot actions in regard to wood energy, energy crops and marine biomass fuels. RASLRES is an international partnership which includes: Western Development Commission Ireland Action Renewables Northern Ireland, UK Environmental Research Institute, North Highland College Scotland Municipality of Norsjö Sweden In the Western Region RASLRES supports the growth of the wood energy sector by delivering practical services to market players and by informing policy development. During 2010 and 2011 RASLRES delivered a range of actions with a focus on selected pilot projects. The project aims to: build sustainable local loops of wood fuel supply and demand via new (or existing) wood fueled boilers offer best practice approaches to support industry development help build critical mass and scale in the wood energy sector of the region support investment plans and help secure project finance RASLRES adopts a full supply chain approach - looking at the energy chain from supply (i.e. fuel producers / processors) to demand (i.e. energy users). The services to the wood energy sector include: provision of a range of impartial technical and business advisory support services to selected clients progressing wood energy projects in the region generation of market information and intelligence to support the sector e.g. resource forecasting from private sector forestry, assessment of energy crop potential, technical and business case studies accessing of international expertise and facilitation of networking with EU markets Disclaimer: All reasonable measures have been taken to ensure the quality, reliability, and accuracy of the information in this report. This report is intended to provide information and general guidance only. If you are seeking advice on any matters relating to information on this report, you should contact the WDC with your specific query or seek advice from a qualified professional expert.

Table of Table of Contents Table of Contents Introduction 3 The Forest Estate 4 The Sligo Forest Estate 4 Age Profile 5 The Resource 6 Regional and County Energy Balance and the Requirement for Renewable Energy 8 Barriers to Market Development 13 Proposals for CHP and Bio Refinery - Market Potential and Impacts 16 Meeting the Market Demand 18 Importation 19 Conclusions 21 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012 1

2 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012

Introduction Introduction Introduction This Resource Assessment is one of seven individual County based resource assessments prepared by RASLRES and this series follows on from the Regional Wood Fuel Resources completed by RASLRES in April 2010 1. The purpose of the initial regional report was to outline the sources and availability of wood based fuels and model various supply scenarios at a regional level. SLIGO DONEGAL LEITRIM A second study completed by RASLRES examined the Regional Heat Market and Biomass Demand Estimates for 2020 2. That study determined the demand for biomass at a Regional and County level by interpreting the National Renewable Heat Targets for 2020 agreed by the EU and the Irish State. The study determined the quantity of wood based fuels required to meet the 2020 targets. The renewable heat market has the potential to create considerable levels of employment across the Western Region and to provide long-term stable markets for low value wood fuels which can compete with fossil fuels and so reduce and fix energy prices for end users. In addition, there are environmental benefits reductions in CO 2 emissions. MAYO ROSCOMMON GALWAY CLARE The Biomass Heat target is one of a number of national targets which will require significant quantities of wood biomass. Other sectors for which national targets have been set include CHP, Co-Firing. These coupled with other markets Bio-Refining, Biomass export and possibly animal bedding will compete with the Biomass Heat Sector for resources. The purpose of this report is to provide Local Authorities and other interested parties with an overview of the potential supply of wood based biomass and estimated demand for renewable heat market within each county. It will also highlight the issues regarding the potential impacts of large scale projects such as Bio- Refineries and/or Combined Heat and Power (CHP) plants on county and regional supply chains. At present there is more than sufficient wood available to meet current demand for wood biomass (estimated to be about 60,000odt 3 annually most of this is used by sawmills to kiln dry timber) and there is considerable potential to grow the biomass market from within existing supplies without straining the resource. Local wood biomass resources are finite and as demand for biomass increases from some or all of the above markets, planners will require a greater understanding of the available resources at both a county and regional level. The increased demand for wood biomass will stimulate increased rates of afforestation and potentially a shift from main stream agriculture into short rotation coppice (SRC) or other energy crops. This will increase the volume of truck movements hauling the fuel stock from its source to where it is consumed. At present there are a number of large scale projects being considered for the region should one or a number of these progress to construction it is likely that the local fuel supply will have to supplement with imported materials from within the EU and 3rd party countries. The point of importation and the additional traffic volume generated will need to be given careful consideration because of the urban location of the region s ports. 1 http://www.raslres.eu/wp-content/uploads/2010/05/raslres-wp3-ss-wood-fuel-resource-assessment-v01-2010_5_6.pdf 2 http://www.raslres.eu/wp-content/uploads/2010/05/raslres-wp3-ss-regional_energy_balance_method_results_ Mar2010-v01-2010_3_16.pdf 3 Oven dry tonnes. Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012 3

The Sligo Forest Estate The Forest Estate The Sligo Forest In 2010 the National Forest Estate was estimated to be 745,500ha or 11% of the land mass. By this date the Western Region s 4 forest estate accounted for 40% of the National Estate - the actual area planted had reached 295,000ha or 12% of the total land area of the Western Region. 37% of the privately owned forests and 42% of the public owned forest are situated within the western region. Table 1 summarises the distribution and ownership of the forest estate at national, regional and county levels. Level Ownership by Area Ha Ownership by % Forest Cover % Private Public Total Private Public National 347,652 397,805 745,456 47% 53% 11% Regional 127,842 166,821 294,664 43% 57% 12% Regional Ownership as % of National 37% 42% Counties Clare 28,234 23,360 51,594 55% 45% 16% Donegal 22,615 36,407 59,022 38% 62% 12% Galway 18,887 38,926 57,813 33% 67% 10% Leitrim 12,553 12,599 25,152 50% 50% 16% Mayo 23,289 34,465 57,754 40% 60% 11% Roscommon 12,945 8,436 21,382 61% 39% 9% Sligo 9,319 12,628 21,947 43% 57% 12% Table 1 Forest Distribution and Ownership at National, Regional and County levels Source: Forest Service 2011 The Sligo Forest Estate Size and Ownership The size and ownership of the county s forest estate and therefore its productive capacity relative to its heat demand has a direct bearing on the county s ability to meet its share of National Targets for two reasons. If a county has a high heat demand but a small forest estate then the demand may out strip the potential supply and the ownership can determine where harvest is sold. At present, most of the timber (suitable for biomass) produced by public sector forests are sold on long-term contracts to state owned boardmills. Therefore, it is expected that increasing demand from the biomass market will be met by increasing supplies from private sector forests. By the end of 2010 the forest estate in county Sligo had reached 21,947ha which is approximately 12.2% of the county s area. This is above the national average of 10.8%. Figure 1 illustrates ownership of the forest estate within the county. Private ownership accounts for 9,319ha or 42.5% of the total area. Over the last five years the county s private estate has increased by 824ha; accounting for nearly 2.2% of the national planting programme for the period 06 to 10. The exclusion of unenclosed land and other environmental restrictions from the afforestation scheme has resulted in lower planting rates. Changes to grants rates have not impacted on afforestation rates in the county. Furthermore, proposed changes in the Common Agriculture Policy (CAP) may limit the transfer of land out of routine agriculture into forestry post 4 The Western Region refers to the following counties; Clare, Donegal, Galway, Leitrim, Mayo, Roscommon and Sligo. 4 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012

Age Profile Age Profile 2014. The proposals have yet to be negotiated, but should they come into effect as currently outlined, only 5% of area currently deemed as agricultural would be eligible for afforestation. There has been no Public afforestation over the last five years. The figures for public owned forests include all state agencies; Coillte, (amenity and productive forests) and National Parks being the main stakeholders. The forecast discussed below includes the expected yields in all forests. Figure 1 Ownership of the Sligo Forests - Source: Forest Service and ITGA 2012 Yearbook Age Profile As indicated above the increased demand for biomass is expected to be met by the increasing volume harvested within the private sector. The age profile of the private estate is one of the key factors in determining the annual harvest area and volume produced. Figure 2 illustrates the age profile of the private estate in Sligo. Figure 2 Age Profile Private Estate Source: Forest Service 2010 and ITGA Yearbook 2012 In terms of developing the biomass market the age groups 11 to 15 and 16 to 20 are of most interest as these forests are currently at or rapidly approaching the age of first thinning. (Thinning is the removal of a portion of the crop at a rate which does not reduce the overall production of the site and it is therefore considered to be sustainable). These age classes comprise 3,930ha. Their harvest product will be new to the market and will substantially increase the volumes of available timber over the next 10 years. Plantations in the 21 to 25 and 26> groups, if not already thinned are unlikely to be thinned in the future as they will be past the Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012 5

The Resource The Resource recommended age of first thinning. The age profile for the public forests are not readily available, however, it is safe to assume that the age profile is evenly distributed as the yield forecasts only fluctuate moderately during the period, which suests that a similar area will be harvested annually. The timber harvested during thinnings and clearfells in both the public and private estates are used to supply a number of markets. These are discussed in the following section. The Resource Wood based biomass comes from three main sources: Private Forests Public Forests Sawmill residues generated from logs purchased from both the private and public forests When logs are harvested they are generally graded according to their diameter and stem quality; these assortments are given in table 2. The two assortments of most interest to the biomass sector are the <7cm and 7-13cm which have the least value and are the most expensive to transport relative to their value and are therefore ideally suited to a locally based wood energy market. The better quality material in 7 13cm class is used to produce fencing posts and attracts a higher price than logs suitable for the wood energy market. The amount of good quality material produced in 7-13cm class depends on the species of tree being harvested. The other assortments are sold into the sawmilling sector. Assortment / Timber Product Sawlog Palletwood Pulpwood: Stakewood Pulpwood (Board mills etc.) Energy Wood Diameter requirement Greater than 20cm 14 20cm 7 13cm 7 13cm <7cm and 7 13cm Table 2 Log assortments The expected yield from Co. Sligo s forests for the period 2012 to 2028 is presented below in Figure 3. The graph includes both the private and public sectors and the results are given in cubic meters over bark (m³ob). Variations in the annual harvest over the forecast period arise because of different rates of afforestation. This is particularly true of the private sector where the changes in grant rates and premia payments resulted in a stop start approach to planting. Rumours of increasing grants and premia reduced the rates of planting, once the increases were confirmed planting rates increased until the next rumour emerged. Another factor which has contributed to lower planting rates was the increasing cost of bare land. 6 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012

The Resource Figure 3 Potential Yields Source: COFORD 2011 The potential yield for 2012 is expected to be 114,000m³. The yield fluctuates between 106,000m³ and 299,000m³ - but generally it increases through the period of the forecast. Currently the small diameter roundwood produced by the public sector is retained to meet existing contracts with publicly owned boardmills. This situation may change in the future as the boardmills which are situated in the south east begin to source suitable raw material from the private sector within the south east region. Residues are produced when sawmills process round logs into sawn timber. There are three forms of residues; bark, sawdust and woodchips. Residues are also known as co-product. Approximately 50% of the volume of timber delivered as logs to a sawmill ends up as co-product. A significant amount of the co-product is already being used in sawmills to generate heat to kiln dry timber and at a number of other facilities to generate process heat. Figure 4 Private Sector Pulpwood Logs and Co-product Source: COFORD 2011 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012 7

Regional and County Regional and County Energy Balance and the Requirement for Renewable Energy There are a number of reasons for the variations which occur in the supply of logs to the market. Different annual planting rates planting rates have fluctuated since in the 1980s the lowest private planting rate recorded for Sligo was in 1984 14.4ha, the highest was in 2001 1195ha. Thinning commences between the ages of 15 and 18 so the amount of land available for thinning is depended on the amount of land planted 15 to 18 years earlier. A second factor thinning is cyclical and therefore the area scheduled for thinning increases year on year as the plantations mature which increases volume of pulpwood produced. However, as the crop matures the average log size increases and therefore, less pulpwood is produced per ha from mature plantations. The forest management assumptions i.e. thinning or non-thin - areas which are left unthinned due to site exposure, soil type and conditions or plantation size reduce the volume of pulpwood produced in the early years but increase it in the later years as these areas are clearfelled. As the private estate matures and average log sizes increase in later thinnings the amount of palletwood and sawlog increases. This increases the amount of timber processed by sawmills which increases the volume of co-product generated by sawmills. Figure 4 above shows that as the private sector matures the volume of co-product increases from 2020 onwards. The yields increase slowly year on year to 2020 and then there almost a doubling of production between 2020 and 2025. This is then followed by two peaks in production in 2026 and 2027 reflect the peak in planting rates in the mid 90s which are in a thinning cycle and the start of clearfelling in the private sector. The areas planted between 2010 and 2020 will compensate for the loss of production from areas clearfelled. The volume of co-product generated within a county depends on the level sawmilling which is basis within the county. Sawmilling capacity in Sligo is low relative to the size of its forest estate. Therefore, most of the sawlog, palletwood and stakewood produced in Sligo are exported to other counties and into Northern Ireland. As a result the co-product associated with round wood sourced in Sligo is generated outside the county. This movement within the region and outside make forecasting woodfuel supplies at a county level difficult. Regional and County Energy Balance and the Requirement for Renewable Energy An Energy Balance describes the supply of and demand for energy across various sectors of the economy and the contributions made by various fuel types. Energy Balance studies can be prepared at international levels such as EU, National level or at regional and county levels. Typically, the energy market is divided into three major groups; Electricity, Transport and Heat. Figure 4 illustrates the energy balance for Ireland based on data relating to 2011 and published by SEAI in June 2012. The red circle on the left shows the total energy inputs and the fuel types used to supply Irish demand. This is known as Total Primary Energy Requirement (TPER). It is clear from the illustration that Ireland is very dependent on fossil fuels which accounted 95.1%, (inputs with oil and natural gas accounted for 82% of total inputs). Renewables accounted for 4.6% and the balance is made of wastes and imported electricity. The red circle on right shows the total amount of energy consumed in the three main energy markets Electricity, Transport and Heat. This is known as Total Final Consumption (TFC). The fuel used for aviation and energy lost to the system during conversion and delivery are shown as exiting the system. 8 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012

Regional and County Energy Balance and the Requirement for Renewable Energy Energy balances are used for planning long-term energy markets and to set realistic goals for switching from one fuel type to another and for setting renewable energy targets for each of the three principle market sections. In 2007 the EU agreed legally binding commitments regarding climate and energy; known as 20:20:20 by 2020 these commitments set out below 5 : 1. 20% reduction in greenhouse gases by 2020 2. 20% increase in energy efficiency by 2020 3. 20% of the EU s energy consumption to be from renewable sources by 2020. The directive 2009/28/EC on the promotion of energy derived from renewable sources sets out how the EU is to achieve the 20% target by 2020. This Directive also requires each member state to prepare a National Renewable Energy Action Plan which sets targets for each energy sector, electricity generation, heating and transport. Ireland has agreed to an overall renewable energy target of 16% 2020. Each energy sector has been given a specific target for 2020 these are: 1. Electricity 40% by 2020. SEAI estimated that in 2011 17.6% was achieved. 2. Transport 10% this target is to be achieved by a combination of a 4% biofuels obligation and an increase in the number of electric cars to 10% by 2020. By 2011 renewables contributed 3.6% 3. Heat 12% of the heat market. SEAI estimated the contribution made by renewables for 2010 was 5%. At this level Ireland would be falling behind on the required growth rates if the national target is to be achieved by 2020. SEAI s provisional estimates for 2011 indicate that Ireland s renewable sector contributed 5.9% 6 to overall energy demand. This suests that the renewables market needs to treble in size if the overall national target is to be achieved by 2020. At present only the electricity sector seems to be making sufficient progress to meet its target. 5 http://www.dcenr.gov.ie/nr/rdonlyres/03dba6cf-ad04-4ed3-b443-b9f63df7fc07/0/irelandnreapv11oct2010.pdf 6 http://www.seai.ie/publications/statistics_publications/renewable_energy_in_ireland_2011.pdf Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012 9

Regional and County Energy Balance and the Requirement for Renewable Energy The Regional Energy Balance & Biomass Heating Demand Estimates for 2020 7 examines the total demand from Heat Sector. Demand in the Heat market comes from the following sectors; Residential, Industrial and Services. Due to poor data collection at regional and county levels various CSO indices are used to convert National Data to demand estimates for both regional and county levels. The estimate for renewables assumes that wood based biomass will account for 85% of the renewable heat market target for 2020. Table 3 sets out the National, Regional and County estimates for wood biomass demand assuming the 2020 targets are achieved. The standard unit of measurement for biomass is the oven dry tonne (odt). By 2020 Co. Sligo would require approximately 18,000 oven dry tonnes (odt) of biomass to meet its share of national targets. To convert m³ob to oven dry tonnes the volume of timber expressed in m³ob is divided by approximately 2.5. Sector 000odt National Regional County CE DL GY LM MO RN SO Residential 584 105 15 20 31 4 17 8 9 Industry 423 77 13 11 26 3 12 6 6 Services 240 35 6 7 9 1 6 3 3 1,247 35 35 38 66 8 35 17 18 Table 3: Demand for Wood Biomass in 2020 Requirements in expressed as 000 odt Source: Regional Energy Balance RASLRES 2010 Achieving the county targets as set out in the Regional Energy Balance will require a great deal of planning and highlights the need for the full engagement of all stakeholders; Local Authorities (Planning Section, Environment Section, Roads and Facilities Managers etc.), Industrial and Commercial Sectors, State Bodies (Teagasc, NPWS and Forest Service), Heat Entrepreneurs, Forest Managers and Forest Owners Public and Private. The most important of these are the Private Forest Owners as it is from this sector that the increase in overall timber supply for the county is to come and key to meeting the county s target for biomass target for 2020. The Regional Wood Fuel Resource Survey RASLRES April 2010 8 examines the demand and supply at a regional level and used four scenarios to model the supply of wood to the heat market. These scenarios modelled the supply side using a number of assumptions which have an impact on the availability of wood to the heat market. The scenarios and the assumptions are set out below: 1. Scenario 1 full availability of roundwood and associated co-product from both the public and private sectors. This scenario assumes that all of the pulpwood is supplied to the heat market is supplied directly from the forest. It also assumes that all of the co-product generated in sawmills derived from palletwood and sawlog produced in Sligo is made available to the Sligo heat market. 2. Scenario 2 full availability of roundwood and co-product from the private sector only. This scenario assumes that all of the material sourced from the public sector is used to supply existing contracts and therefore not available to the local heat market. 7 http://www.raslres.eu/wp-content/uploads/2010/05/raslres-wp3-ss-regional_energy_balance_method_results_ Mar2010-v01-2010_3_16.pdf 8 Regional Wood Fuel Resources RASLRES April 2010 - http://www.raslres.eu/wp-content/uploads/2010/05/raslres-wp3-ss-woodfuel-resource-assessment-v01-2010_5_6.pdf 10 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012

Regional and County Energy Balance and the Requirement for Renewable Energy 3. Scenario 3 60% availability of roundwood and co-product from the private sector only. As with scenario 2 above this scenario assumes that the only available material will be sourced from the private sector. Furthermore, it assumes that only 60% of the potential private sector supply is available to the local heat market. The reduced supply to the heat market maybe as a result of competition from other non-heat markets which yield a better return or where the costs of harvesting and road transport result in the woodchip being uncompetitive with fossil fuels. 4. Scenario 4-35% availability of roundwood and co-product from the private sector only. As with scenarios 2 and 3 above scenario 4 assumes 35% availability from the private sector. This situation may arise if the rate of boiler deployment does not keep pace with the increasing rate of harvesting. Forest owners, particularly those with small plantations and/or high harvesting costs will require long term, stable locally based markets for large volumes of low value pulpwood logs. This is exactly the type of market provided by a local biomass heat market. Therefore, if demand for wood fuel is low because of low installation rates many plantations will remain unthinned because poor returns to forest owners. The results of the modelling are presented in Figure 5a below. As stated above the expected demand from the biomass market for Sligo in 2020 will be 18,000odt. Under scenario 1 all material being available there is a potential supply surplus of 27,000odt. It is unlikely that this situation will arise because currently most of the pulpwood produced by the public sector forest is retained to supply long-term contracts with board mills. Therefore the private sector will have to meet the majority of the demand. Scenario 2 suests that if all of the pulpwood and associated co-product harvested in the private sector is made available to the heat market the heat market will be in balance. Scenarios 3 and 4 may arise if certain market conditions apply low rates of boiler installation or increased demand for stakewood which attracts a better price. If the rate of boiler installation remains at its current level there will be insufficient demand and economies of scale required to justify harvesting in remote or small plantations. The RASLRES study Wood Energy Installations 9 states that there is 1 wood fuelled (woodchip and wood pellet) boiler installations in Sligo totalling 60kW and this system runs on woodpellets. However, the author understands that there are buildings in the charge of the council which are heated by biomass systems. If Co. Sligo is to meet its target there needs to be a greater roll out of boiler installations and wider use of firewood in the domestic market. 9 http://www.raslres.eu/wp-content/uploads/2011/06/wood-energy-installations-wr-2011.pdf Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012 11

Regional and County Energy Balance and the Requirement for Renewable Energy Figure 5a County Sligo Results Scenarios 1 to 4 Roundwood and Co-Product included Source: DARE Ltd. The supply of biomass modelled above and presented Figure 5a assumes that both pulpwood and coproduct are available in varying volumes according to each of the scenarios. However the market is further complicated because the amount of co-product available will depend on where the pallet and sawlog are processed. The quantity of co-product produced within a county depends on the number and size of sawmills based within the county relative to the volume of timber harvested in that county. Co. Sligo has a number of small scale sawmills, therefore most of the palletwood and sawlog is exported to sawmills based in other counties. This means that the vast bulk of co-product associated with timber harvested in Sligo is generated outside the county and not readily available to the Sligo heat market. To illustrate the impact caused by the loss or removal of co-product from the heat market a second set of scenarios were modelled where only round logs (pulpwood) is available and co-product is excluded but the participation rates remain the same i.e. Full Private and Public Sector, Full Private Sector only, 60% Private Sector and 35% Private Sector. The results are presented in Figure 5b. Figure 5b County Sligo Results Scenarios 1 to 4 Roundwood only 12 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012

Barriers to Market Barriers to Market Development Again, the results modelled in scenario 1, full availability of logs from both the public and private sectors, there is sufficient supply to meet the estimated demand for 2020. However, in scenario 2, full private sector pulpwood only, the supply of pulpwood would be 10,000odt or approximately 55% of the potential demand. The shortfall will be about 2,000odt per annum. The results for scenarios 3 and 4 are; supply 6,000odt or 30% of market demand and 3,000odt or 16% of market demand respectively. The results modelled above for scenarios 3 and 4 and presented in Figure 5b still suest that the biest barrier to market development is the low rate of wood chip boiler installations, because at present there is no demand for woodchip. Barriers to Market Development There are a number of factors which act as barriers to the development of the wood energy in the private sector woodlands. The impact of each barrier will change as the market matures. In most counties the biest barrier is a lack of demand from the wood chip market which has stagnated. However, the addition of the boiler to Connacht Gold site will stimulate demand in the private sector. Other factors also act as barriers to market development and the main barriers are list below it is important to remember that the impact of each and its priority will change over time and others may arise in the future but the main ones are listed below: 1. Stagnation of demand and low rates of boiler installation 2. Lack of awareness and/or understanding amongst potential end users 3. Lack of awareness and/or understanding of the process of harvesting 4. Plantation size 5. Access to plantations along public and private roads. 6. Competition from other markets for pulpwood These barriers are discussed in greater detail below. 1. Stagnation of the wood chip market In recent years the number of boilers installed annually has decreased and with the removal of the grant aid, end users must now fund the entire cost of the boiler installation. Woodchip boilers are considerably more expensive to install but the fuel cost are stable and cheaper than fossil fuels. Given the current economic climate and difficulties accessing funding many potential end users in the private sector are not considering wood fuel at present. Public Sector bodies with high stable heat loads are the best opportunity at present, given the Government s drive for greater energy efficiency and requirements to reduce greenhouse gas emissions. An unpublished RASLRES survey recommended that two publicly owned buildings in Co. Sligo be surveyed to assess their suitability for woodchip and the feasibility of an ESCO contract. 2. Lack of awareness and/or understanding amongst potential end users In some cases potential end users are not aware of the alternatives to fossil fuels thankfully this number is now falling. There are still some misconceptions regarding the quality and reliability of supply and the location of wood chip suppliers. At present there is one supplier operating in the western region who has attained certification from the Wood Fuel Quality Assurance scheme (WFQA). This scheme certifies that the wood chip is produced in compliance with EU standards and that the moisture content and chip size comply with heat supply agreements and that the timber used to produce the wood chip has been sources from sustainable managed plantations and has been legally felled. Further information regarding installations, suppliers of wood chip and the WFQA is available from www.raslres.eu and www.wfqa.ie Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012 13

Barriers to Market Development 3. Lack of awareness and/or understanding amongst forest owners Forestry is a long term investment and once planted and the premia secured many owners let the management of their plantations slip down the list of priorities. In some case the ownership of the plantation may change and the new owner might not be familiar with forest management processes and the processes involved in bring timber to the market. The National Forestry Inventory NFI completed in 2007 estimated that only 25% of the private estate ready for thinning at that time had been thinned. This highlighted the need to put in place a forum through which forest owners could improve their understanding of forest management. The Forest Service and Teagasc and many of the Leader Companies in the region have promoted the development of producer groups. There are a number of producer groups scattered throughout the region at various stages of development. 4. Size of plantations The average size of privately owned plantations in the western region is 9ha with a median of 5.5ha, making it difficult to achieve any economies of scale in terms of roading and harvesting some these plantation have been excluded from the thinnings forecast. However, the yield is included in the expected clearfell volume. If these plantations are to be harvested they need to be grouped so that economies of scale can be achieved - this is one of the strengths of the producer group approach to harvesting. 5. Access to Plantation along Public and Private Roads Forest Roads - A critical issue over the coming years will be the construction of forest roads. At present forest owners are eligible for grant aid for the construction of Forest Roads. To be eligible a plantation must be within two years of thinning. There is a three to four year window within which thinnings must be carried out if the stability of the crop is to be assured. Failure to do so will leave the crop vulnerable to wind throw. The available funding is limited and is decided on a year to year basis. Without grant aid many plantations will be left unthinned because the cost of roading relative to the value of the material harvested cannot be justified. Evidence from the Cork and Galway Forest Producers Group Project confirms this to be the case. If long-term funding is not put in place and this issue is not resolved many owners will leave their plantations unthinned, thereby reducing the supply of wood to the biomass and other timber processing sectors in the short and medium term. This timber would not be lost entirely but instead of having a regular supply on a five year cycle there would be a once off yield at the end of the rotation as unthinned areas are clearfelled. Figure 6 presents a summary of the required level of investment and amount of road to be constructed using the current scheme rates of 20 linear meters per ha and a maximum rate of 700 euro per ha. The cost for the period 2012 to 2026 would be approximately 2.1m and the length of road required would amount to 60km servicing an area of 3,000ha scheduled for first thinning. Further roading will be required to services areas schedule for clearfelling. The figure assumes that roads are constructed two years in advance of thinnings. 14 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012

Barriers to Market Development Figure 6 Roading requirement areas scheduled for first thinning Source: COFORD 2009 Access via public roads Local Authorities have become more concerned regarding potential damage to or the inability of some local roads to support the weight of timber lorries. It is becoming more common for Local Authorities to restrict the weights to be carried on 3rd class roads to approximately 15t. This restriction means that the timber has to be double handled increasing the cost of harvesting significantly. By way of example, a plantation due for clearfell was recently granted a new felling licence which included a new weight restriction on the access road. The weight restriction was not in place on the previous felling licence which is still valid. The cost of harvesting under the old licence was agreed at 18/t. However, to comply with the weight restriction imposed by the new licence the timber has to be hauled from the forest to a transfer depot on a main road where it is reloaded for onward shipping. This has increased the cost of harvesting by 2.50 to 3.00 per tonne; the average cost has increased from 18/t to 22/t. This increases the harvesting cost by 12,375 or represents a 15% increase in the cost of harvesting. If this increase was applied to a thinning the returns would not cover the cost of harvesting. These restrictions should they continue to be applied will significantly reduce the volume of timber harvested and may jeopardise the region s timber processing industry. Most of the sawn timber produced in Ireland is exported to the UK and Europe and our exports must compete with timber produced in areas where scale and direct access to markets means that the price for sawn timber is low. Irish timber will not be able to compete if our cost base increases at the rates described above. If the adhoc nature approach to harvesting was removed by using the COFORD forecast model to identify plantations in an area which are due for thinning, the thinning dates could be moved forward or back so that all of the timber to be harvested in the area would be harvested within a specified time frame. This process could be repeated in line with thinning cycles. This would enable forest owners, the Forest Service and Local Authorities to plan for road repairs and also provide detailed information to the processors as to the availability of timber within their areas. This information would allow timber processors secure a greater proportion of their timber closer to the mills thereby reducing road haulage costs. Some of these savings could be used to offset the cost of double handling or result in higher prices paid to forest owners which in turn would encourage more forest owners to thin their plantations. It is the authors understanding that Coillte, the Forest Service and Local Authorities already discuss harvest plan and transport routes using information similar to that on which the COFORD forecast is based. The recently enacted planning legalisation now stipulates that some forest entrances require planning permission. It is not clear from the legislation exactly which forest entrances require planning permission and those that don t. This situation and the cost associated with planning permission need to be agreed at a National Level. Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012 15

Proposals for CHP Proposals for CHP and Bio Refinery - Market Potential and Impacts 6. Competition from other Markets Competition for the wood resource will come from various markets, at a large scale these markets include; CHP, Co-Firing and Bio refining. On a small scale competition will come from the stake and fencing market and animal bedding. As stated above, Ireland s National Targets for Renewable energy extend to electricity generation market and it is acknowledged that wind power will be largest supplier of renewable power to the grid. However, two other generation types CHP and Co-Firing will compete for wood biomass. The Government have set very ambitious targets for both of the sectors: CHP 800MWe by 2020, this target includes both renewable and fossil fuelled CHP plants. By 2010 installed capacity had reached 307MWe of which 284MWe were operational. Co-Firing to replace 30% of the energy inputs by 2015 this will require approximately 900,000t of biomass annually. The three mid-land peat fired plants are to deliver this target. Moneypoint in Co. Clare are still assessing the possibility of co-firing. Combined Heat and Power (CHP) plants serve two markets because they generate electricity and heat at the same time. Most of the energy inputs i.e. woodchip or other fuel, is recovered as either electricity which is sold to the grid and the heat which can be used in district heating networks or to supply process heat to a factory. SEAI estimated that the overall efficiency of CHP to be 84%. New plant in the high-efficiency class recover from the total input between 85% and 95% making CHP an extremely energy efficient process and maximises the returns from a limited resource. There are three wood fuelled CHP plants operation on the island of Ireland. Co-Firing refers to the substitution of a fossil fuel, usually coal or peat, with biomass. An example of this would be peat fired power station in Edenderry, Co. Offaly. At present Edenderry consumes about 110,000t of wet woodchip and other biomass annually. This is set to increase to 300,000t per annum by 2015. In a co-firing plant the only energy recovered is electricity, most of the heat element is not recovered - the heat generated is lost to the atmosphere through water cooling towers. Co-firing recovers about 30% of the energy inputs which is a very poor recovery rate from a finite resource. The introduction of the Renewable Heat Incentive (RHI) in Northern Ireland will impact on the demand for wood fuel in the border region, Donegal, Sligo and Leitrim. Under this scheme end users receive an incentive for using renewable fuels ranging from 1.5p/kWh up to 6.2p/kWh. For a typical 350kW boiler, running at full load for 2890 hours delivering 1012MWh per annum the incentive received could be as high as 15,180stg per annum. This amounts to a subsidy of about 46stg per tonne of woodchip delivered at 35% moisture content. These incentives are payable for twenty years and will no doubt promote greater rates of boiler deployment in Northern Ireland and inevitably heat entrepreneurs will have to look south to secure supplies. The stake and fencing and animal bedding markets are expected to continue at the current rates and while they experience increased competition from the biomass markets it is likely that they will be able to secure their requirements because of a price premium paid for better quality logs suitable for stake production. At present the premium is four times the value of logs destined for the woodchip market. Proposals for CHP and Bio Refinery - Market Potential and Impacts Over recent years there have been several announcements regarding the development of the CHP sector across the western region. Planning permission has been granted for one CHP plant in North Mayo. Imperative Energy has also announced plans to develop a CHP/Bio refinery plant at Claremorris, Co Mayo. Combined Heat and Power plants have the potential to deliver significant benefits to the region in terms of employment stimulation, diversification for farm enterprises and rural incomes, stable energy prices not to mention the potential environmental benefits. 16 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012

Proposals for CHP and Bio Refinery - Market Potential and Impacts RASLRES is aware of seven CHP proposals throughout the region. The total installed capacity for these proposed plants at present is approximately 124MW e (311MW th ). Data regarding fuel requirement was received from six of the proposed plants their total annual demand is estimated to be 1085kt wet weight basis. Most of the plants intend to use wood as their primary fuel and where possible to source this locally. The annual demand estimates for these plants range from 60,000 green tonnes to 350,000 green tonnes per annum. Therefore, it is necessary to assess potential combined impacts of these plants at a regional and county level as it unlikely that any county will be able to accommodate even a small scale plant without drawing fuel supplies from neighbouring counties. It is also critical to know where the plants are based and that there is sufficient heat demand close to the CHP to ensure that all of the heat produced is used. The demand must also be considered in the light of targets and existing markets. If these plants are to be constructed within the region planners must assess each one with an understanding of the available fuel resources and the demand from other plants with in the region. The following section is intended to give planners an understanding of some of the issues involved in establishing a sustainable CHP and Bio Refining industry. CHP is the most efficient use of fuel in that approximately 85% of the energy inputs are recovered in the form of electricity exported to the grid and heat sold on as process heat or for space heating. The Commission for Energy Regulation (CER) hosted a consultation process the aim of which was to agree exactly what constitutes useful heat. Useful heat is defined in the CER consultation paper as heat produced in a cogeneration process to satisfy an economically justifiable demand for heating or cooling. Examples include process heating, space heating, district heating and the use of exhaust gases for drying. The CER outlined two options in the consultation paper. Following the consultation process the CER have decided that useful heat shall include heat sold on to 3rd parties and heat recycled back into the plant to process and dry fuel stocks. Promoters of CHP must also comply with other conditions relating to the sale of heat to 3rd parties and that such sales are economically justifiable and would otherwise be met at market conditions. The rollout of CHP in the western region will impact on the regions heat market and the extent of this impact will depend largely on were a plant is situated. If a CHP plant is situated adjacent to a medium sized town or industrial area and the heat is sold to 3rd parties as process heat or as spacing heating through a district heating network then the heat supplied will displace an existing heating system, in most cases this will an existing fossil fuel system. In these circumstances the existing heat market may increase moderately but the percentage met by renewables will increase substantially. If the CHP plant which is not connected by way of a district heating network to either a town or industrial complex it will not displace any of the existing heat market. Therefore, any heat generated will increase the overall size of the heat market. RASLRES has estimated that 217,000odt will be required to meet the Regions 2020 renewable heat targets. The combined fuel requirement for the six CHP plants for which data was supplied is 477,000odt. Heat accounts for 71.5% of the output of these plants, therefore, it could be argued that 341,000odt of the fuel input is part of the Region s heat market. This in theory implies that CHP could meet 157% of the Region s 2020 renewable heat market estimates. However the reality is that by allowing recycling of heat, the regional heat market will increase to provide heat for new manufacturing processes associated with the proposed CHP plants. The size of this increase will only become apparent as when developers make their plans and how they intend to treat the heat generated known to Local Authorities. The impact of this increase demand is discussed below. By locating a CHP plant close to an existing heat load there is the possibility to displace fossil fuels. Previous RASLRES studies have indicated that by 2020 the total potential forest based biomass resource in the region is 526,000odt (Public and Private sector woodlands and Co-product). If the current market is assumed to continue then a significant quantity of the resource will be diverted into other markets including the existing biomass market. The total demand from all markets will be 816,000odt which exceeds the potential supply by 289,000odt. Figure 7 illustrates the composition of the market and assumes that all the heat generated by CHP is included as useful heat. Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012 17

Meeting the Market Demand Meeting the Market Notes: 1. Potential CHP includes fuel requirement for both heat and power and that all heat produced is deemed to be useful heat 2. The Region s Share of National targets for Co-Firing and Board Mill requirements are based on the Regions forest area circa 36% 3. Current Biomass market estimated to be 40,000odt 4. An allowance is included for continued demand for the stake market Figure 7 Regional Supply and Market Demand 2020 Meeting the Market Demand In the short to medium term conventional forestry cannot meet the potential increase in demand because of the length of time between planting and 1st thinning from 15 to 20 years. There are a few ways in which the shortfall identified in Figure 1 can be met; 1. Locally sourced energy crops. 2. Importation of biomass from outside the region or from other countries. 3. Utilisation of biomass fraction of waste or agricultural residues 4. Development of further feedstock conversion technology (e.g. torrefaction 10 ) Table 4 presents the current levels of deployment for energy crops in the western region. It must be remembered that these crops are likely to be grown under contract. The source is the SEAI Bioenergy Maps 2011. 10 Torrefaction is pre-treatment technology to make biomass more suitable for cofiring applications. It is a thermo chemical treatment method carried out under atmospheric conditions in the absence of oxygen. 18 Resource Assessment for County Sligo Sligo Fuel Resource Survey and Biomass Demand November 2012