Paul Kellett
Tel 023 42193 Fax 023 41304 Email [email protected]
January 1999
Wood fired Combined Heat and Power in the Irish
Wood Processing Industry
1) Introduction to Combined Heat and Power (CHP)
a) What is CHP?
b) Background
c) What is Biomass CHP?
d) Why invest in Biomass CHP?
2) What are the benefits?
a) Cost Saving
b) Competitive Edge
c) Secure supplies of energy
d) Better control
e) Environmental Benefits
f) Plentiful Wood Fuel Resources
3) What are the risks?
a) Financial considerations
b) Technical considerations
c) Fluctuations in the energy market
4) What Next?
a) Is Biomass CHP suitable for your company ?
b) Have other cost-effective efficiency measures been considered?
c) What is your company’s long term strategy?
d) Further information
Introduction to Combined Heat and Power:
What is CHP ?
Combined heat and power is the generation of thermal and electrical energy in a
single process, normally using fossil fuels such as natural gas. In this way, optimum
use can be made of the energy available from the fuel. CHP installations can typically
convert between 80% and 90% of the energy in the fuel into electrical power and
useful heat. This compares with conventional power generation, which has a delivered
energy efficiency of only around 30%.
Condensing Power Station
Electricity production only.
35 %
65 %
Combined Heat and Power Plant
Production of both electricity and heat. Minimal Losses using CHP
35 %
55 %
10 %
Combined Heat and Power (CHP) is a very common industrial energy efficient
technology used increasingly in industry world-wide. In the UK alone, 10,000 MW of
CHP is to be installed by 2010. As wood processing is an energy intensive industry,
CHP can make a significant impact on profitability. Evidence shows that CHP can
reduce total site energy costs by over 30%. In Europe, leading wood fired CHP
equipment supply companies are based mainly in Scandinavian.
There are currently four large industrial wood processing plants in Ireland*. They
have a combined heat capacity of over 110 MW and a combined electricity
requirement of over 40 MW. All of these plants use wood waste to provide their
process heat and then buy in their electricity separately. None of these plants currently
uses CHP. Evidence shows that in the Paper and Board sector, CHP can reduce total
site energy bills by as much as 30%.
All of these Irish plants could generate electricity from wood fired CHP. A recent
report on the total renewable energy resource in Ireland has also highlighted the
significant potential of wood biomass CHP. If the four companies were to employ this
technology it would add some 30,000 toe (tonnes of oil equivalent) to Ireland’s
Renewable Energy Balance and would represent almost a quarter of Ireland’s
renewable electricity production in 2000. In addition, all of the wood fuel for these
CHP plants would be grown in Ireland, providing a secure, long term, supply of
electricity and heat from a major national resource.
As wood biomass is CO2 neutral, the savings in terms of CO2 emissions (the main
greenhouse gas) could be in excess of 300,000 tonnes annually. This would represent
a total CO2 emissions saving, for Ireland, of about three quarters of a percent of total
annual energy CO2 emissions.
The overall cost benefit to any one of these four companies, in financial terms, could
range from £ 500,000 to £ 1,500,000 per annum. Typical self-financed schemes
normally have a payback of around 4 to 7 years and a plant life of 20 years or more.
* Irish Primary Wood Processors
• Willamette Europe, MDF manufacturers, Clonmel
• Finsa, chipboard manufacturers, Scariff, Co. Clare
• Louisiana-Pacific Europe, OSB manufacturers, Waterford
• Masonite Ireland, MDF manufacturer (doors), Leitrim
• Spanboard, MDF manufacturers, based in N. Ireland.
What is Biomass CHP ?
Biomass CHP uses renewable fuels which are derived from four main sources: forest
residues, agricultural residues, waste & processing residues and from crop processing.
Using wood waste as the fuel source in an industrial wood processing plant is an
obvious choice as wood waste is a by-product of production.
From an environmental point of view a wood biomass CHP plant has many
advantages over a fossil fuel plant:
• Wood is a renewable source of energy, which is carbon dioxide neutral.
Generating 1 MW of electricity from wood would save the production of 7,500
tonnes of CO2 (the main greenhouse gas) a year.
• The emission of gases which cause acid rain is considerably reduced.
Why invest in Wood Biomass CHP?
CHP will reduce your energy costs.
CHP is widely used by your competitors in Europe and elsewhere.
CHP can offer security against energy price fluctuations.
CHP provides a secure supply of energy to your site.
CHP can help your business comply with environmental legislation.
CHP can improve your profit margin and give your company a competitive edge.
The Benefits of Investing in Wood Biomass CHP
Energy Cost Savings
Secure Energy Supply
Secure Energy Prices
Better Control
Environmental Benefits
CO2 Emissions
Local Job Creation
Imported Fuel
Local Self Sufficiency
Sustainable Development
Fossil Fuel CHP
Medium term
Medium term
136 Tonnes/TJ
Short term
Wood Biomass CHP
Long term
Long term
0 Tonnes/TJ *
Long term
No, a national resource
* Wood Biomass is CO2 neutral, 1 TJ = 278,000 kWh
What are the benefits ?
Cost savings:
CHP systems derive the largest amount of their revenue or cost savings from the
generation of electrical power. In larger systems, that power is typically sold to the
electric utility company; in smaller and mid-sized systems (10 MW to 20 MW or
less), as would be installed at building and small industrial sites, the power is typically
used on site, reducing retail electricity purchases.
Competitive Edge:
Board manufacturing is an energy intensive process with a large simultaneous
demand for electricity and heat. This makes industrial board plants good candidates
for CHP installation. The most important benefit that CHP offers is a substantial
reduction in a site’s energy costs. Evidence shows that in the Paper and Board sector,
CHP can reduce total site energy bills by 35%. As energy cost represents over 20% of
the production cost, this level of saving can make a significant impact on profitability.
Secure supplies of energy:
Secure supplies of electricity and heat are of critical importance for both commercial
and safety reasons. The impact of any temporary loss of mains electricity can be
minimised by configuring the CHP plant to supply essential site loads. In addition,
combustion of biomass often takes place in multi-fuel boilers, which gives a choice of
a much wider range of fuels. Typically, fuels such as sawdust, wood residues (bark,
wood chips, wet and fresh wood residues), dry wood residues from the wood working
industry (plywood, particle board, cuttings) and recycled fuel (paper, cardboard,
demolition wood) can be used.
Better Control:
Modern wood biomass CHP equipment is likely to require less effort to operate and
maintain than many older boiler systems, as CHP plant is equipped with automatic
control and monitoring equipment.
Environmental benefits:
Wood Biomass CHP has a very high energy efficiency. This optimises the use of fuels
and eliminates the production of CO2. Furthermore, biomass CHP is one of the most
environmentally friendly forms of heat and power generation. Wood biomass contains
very little sulphur and is carbon neutral, which gives it significant environmental
advantages over fossil fuels, particularly coal.
Biomass provides important global environmental protection gains. The sustainable
use of biomass would displace fossil fuel CO2 emissions and contribute to protection
against global warming. Use of biomass rather than coal or oil, can result in lower
levels of local and regional pollutants including NOx and SOx. However, the use of
appropriate, modern technology is critical.
Plentiful Wood Fuel Resources:
Ireland’s Wood Fuel Resources:
The potential wood biomass resource for electricity and heat production in Ireland is
very large. Ireland has significant, under-utilised sources of wood based energy
(Table 1). The first and most obvious source is the utilisation of existing surpluses and
wastes from the forestry and wood processing industries.
Table 1
Energy from Wood Biomass – Practical Irish Capacity (MW)*
Forest Residues
Wood Industry
Current Use
Practical 2000
Practical 2020
*Electrical Capacity Only, Heat Not Included.
In addition, Ireland intends to increase its forest cover from the relatively low 8% of
land area at present, to 17% by the year 2035.
Waste By–products from Industrial Wood Processing
These consist of chips, sawdust, bark, ply-wastes and wood wastes from the wood
industry. The main portion of waste sawdust, bark and other wood waste is used to
produce energy in the form of heat or sold to horticultural markets. The efficient use
of these by-products is a basic necessity for an industrial wood-processing plant.
However, a more energy and cost efficient way of utilising these by-products is as a
fuel for both electricity and heat production in a wood fired CHP plant.
Logging residues
These are the parts of the tree that cannot be used by the timber or pulp industries,
such as branches and tree tops, and small, whole trees from thinning. Normally this
material is left on the forest floor to rot. If needed for fuel it is taken to a roadside or
processing plant where it is chipped into 25 - 50 mm pieces. In response to the
growing demand from biomass CHP plants in the Nordic Countries, new, more cost
effective, technologies for fuel preparation are being developed. These include the
integration of fuel chips with sawmill and pulp log production as well as the baling of
logging residues for transportation to centralised chipping facilities. Wood from parks
and gardens will also give a fuel with the same properties as logging residue.
Forestry residue is a high quality biomass fuel - it is clean and contains very little ash
(only 1 to 3 % ash). It can have a high moisture content in the more northern
countries but otherwise gives few problems with combustion equipment. Current
deployment is concentrated in the Nordic countries, where there is a fully commercial
market, but forestry residues will become increasingly important as a clean, secure
and sustainable energy resource throughout the EU.
What are the risks?
Financial considerations:
Biomass CHP involves substantial investment. A decision to allocate millions of
pounds to an energy plant rather than a production plant does not fit the investment
strategies of many businesses. Over half of the companies installing CHP in the last 2
years in the U.K. have chosen to deal with this issue by using alternative sources to
fund their scheme, such as those provided by energy service companies or by the CHP
equipment supplier.
In a typical energy services contract, a third party provides the capital for the CHP
plant and then installs, operates and maintains the equipment. Both parties agree on
who should bear the different costs and risks, and how the savings should be shared.
A contract will normally run for 10 to 15 years, with the host site buying the
electricity and heat produced by the plant at preferential rates. As a comparison, selffinanced schemes normally have a payback of around 4 to 7 years with a plant life of
20 years or more.
Capital costs of biomass fired power plants are higher than those of gas or oil fired
plants due to the nature of solid fuel. However, cost levels have decreased
considerably in the last few years. As the plant size increases, the economy of solid
fuel plants becomes more attractive. Also, investment subsidies are available for
renewable energy plants both from the European Commission and the Irish
The financing options include:
Capital Purchase, in this case the organisation bears all the capital cost and
realises all the subsequent savings.
Equipment Supplier Finance, where the capital is provided by the equipment
supplier. This is typical for a site that does not have funds available and is looking
for a straightforward “one-stop” approach to CHP.
Contract Energy Management, where an organisation contracts out its energy
services. Contracts can be based on a fixed fee, an agreed unit price for energy or
a shared savings approach.
Technical considerations:
Biomass CHP is a well established and technically mature technology but it is vital
that the right design decisions are made. In simple terms, the key to maximising cost
savings is to have a good match between site heat requirement and the heat produced.
Establishing this requires a detailed study.
Biomass to electricity plants need a wide range of standard equipment which is
manufactured in many countries e.g. transformers, boilers, heat exchangers,
generators, steam turbines, incinerators, fuel dryers etc.. The EU is the market leader
in conventional steam cycle power plant since the inclusion of Finland and Sweden in
the E.U.. The equipment used in the fuel supply chain such as forestry harvesting,
transport machinery and residue baling systems are supplied largely from the EU but
also from the USA.
Fluctuations in the energy market
The economics of biomass CHP depends on the cost of the fuel. A major advantage of
a biomass CHP plant over fossil fuel plant is the ability to burn many various fuels. In
the wood processing industry wood fuel is a by-product, which can be easily used in a
CHP plant in the same way as it is now used in heat only boilers, but in a more
efficient & cost effective manner. In addition, wood fired CHP will use a secure
supply of local, low cost fuel from one of our own major national resources.
Wood chips from forest residues are usually used as an additional fuel and purchased
by marginal price. This makes it difficult for wood chip fuel to be competitive with
other fuels until markets are well developed. The price of wood fuel has decreased
steadily in the Scandinavian countries due to the development of production
technology, forest management and logistic systems. In addition, with multi-fuel
boilers, inexpensive recycled fuels such as paper, cardboard, demolition wood and
horticultural wastes, which are also renewable, can be used.
Energy and CHP suppliers recognise that businesses need price stability to enable
decisions to be made. Hence these companies are developing the capacity to manage
financial risk on behalf of clients through long-term energy supply contracts.
What Next?
Is Biomass CHP suitable for your company?
Before embarking on any feasibility studies, it is essential that your company is both
in a position to take on the long-term commitment associated with a CHP plant and is
prepared to make such a commitment.
CHP represents a major decision at board level. It will involve a major investment or
a long-term, legally binding financial agreement with an energy services company.
Have other cost-effective efficiency measures been considered?
CHP should be considered as one element of an overall energy strategy. If overall
energy demand can be reduced through other energy efficiency measures, then a
smaller CHP plant may be appropriate. This would reduce the cost and may help the
proposal to succeed. Conversely, economies of scale will be lost with smaller plant
and the overall financial returns may be reduced. This last point is especially
important for all solid fuel plants, including those using wood & waste biomass.
What is your company’s long term strategy?
CHP plant has an operating life of up to 25 years and is typically evaluated over a 10year horizon. The full financial benefit of the plant will be realised only when it is
operated at close to optimum conditions over the whole of its life. Because the
viability of the scheme may be adversely affected by major reductions to the heat or
power loads, it is important to ask:
What has been the historical pattern of heat & power loads?
Are there any activities to be discontinued or are any new products or processes
If so, will they use existing plant and to what extent will they impact on the site’s
heat and power loads?
The flowchart on the next page may help you to evaluate the suitability of wood
biomass CHP for your company:
Further information
Consider these questions:
Is cutting costs the best way to boost profits?
Is energy a major cost for any of your sites?
Is wood, or waste, part of your business?
Do any of your sites have a simultaneous demand for heat and electricity over
4,500 hours each year?
If you think the answer to the above is yes, then simply contact the Renewable Energy
Information Office and ask for more information on biomass CHP.
Is Wood Biomass CHP a Potential Option for Your Company ?
Have all cost
effective energy
alternatives been
Carry out a thorough energy
review or audit of the site.
Determine when
future heat and
power loads can be
Evaluate the future
likely loads
CHP is unlikely to
be cost effective at
present. Re-evaluate
in the future
Are major
changes expected
to future heat and
power loads
Do the heat and
power loads
Does the annual
operating period
exceed 4,500
Investigate the
feasibility of
Are you considering
boiler upgrade,
replacement or
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