Tom and Larry It is very important to be realistic in the business model that is used to assess the value of the heat and electricity of the gasifier.
In Denmark, energy for heating you house is very expensive and regulated by law. If you have a natural gas boiler you pay 1,5-2 $ pr m3 gas = 40 MJ (the gas price follows the oil price) and you end up paying 4-5 c$ pr MJ ~ 15 c$ pr kWh for the heat. You pay 8 $ pr GJ for industrial wood chip (80 kg) ~ 0,8 c$ pr MJ, thus there should be a reasonable margin for profit for the gasifier. You purchase 1 GJ (1000 MJ) wood chip for 8 $ - sell 20 % (200 MJ = 55 KWh) as electricity for 25 c$ pr kWh (high green support) 55*,25= 13,8 $, and 60 % (699 MJ) as heat at 4 c$ pr MJ = 600*,04=24 $. Thus there are approx. 37-8 =29 $ in gross profit pr. 80 kg wood chips, to pay the gasifier and operation. But you can produce heat from much cheaper biomass in a simple boiler. Eg if you use cherry stones at 3-4 $ GJ as fuel, you can produce heat at less than 1 c$ pr MJ and the "real" electricity price is maybe 6-8 c$ pr. kWh ~ 2 c$ pr. MJ. The real commercial calculation will look more like this: You purchase 1 GJ good quality fuel which I required by the gasifier at = 8 $ You produce 55 KWh electricity which with a market value of 4 $ and 600 MJ heat with a market value of 6 $ = 10 $ Thus you have 2 $ left for the gasifier and operation and maintenance. The is a description of the situation in Denmark (and EU) for gasification technology in 1988 and 2012. It explains why there are so many stalled or failed gasification projects. The projects are born with a political defined business case but they have to survive in the real world. Too many unrealistic dreamers, too many politicians, too many economists and a lot of money for dubious "green" projects = a lot of taxpayers money spent. Thomas Koch Fra: Gasification [mailto:[email protected]] På vegne af Peter Davies Sendt: 21. september 2014 04:30 Til: [email protected] Emne: Re: [Gasification] : Borealis / Spanner RE2 CHP Tom, Interesting financial assessment, we have found during our own development that most of your assumptions though to be way too optimistic, at least in the Australian business environment. As an example we had a Poultry client needing 100kWe, their commercial power rate was 23c/kWhr and they used a little over 160mWhr/yr. They had limited heat needs but were sourcing green sawdust and wood chip which could be dried using the surplus heat from the gasifier, as well as a unique bio-security opportunity that the presence of the gasifier provided in disposal of dead birds, along with superior odor control and improved shed environment through use of the biochar co-produced (none of this valued in the proposal). The clients consultants determined we could supply the complete turnkey system for <12c/kWhr (including buying in fuel and labor). One of the electricity retailers then offered a grid supply agreement fixed for 3 years at an average of 5.5ckWhr including peak & shoulder rates, no capital outlay required. The result being implementation of the gasifier solution was deferred. This type of example has been repeated a number of times over the last 2 yrs. At least we are good for competitive influence in the electricity market... It has also taught us about the importance of the total value proposition (VP), rather than simply focus on individual aspects like electricity. http://en.wikipedia.org/wiki/Value_proposition We cannot yet claim longevity in operational hours in commercial environments with our own systems, it is coming but not independently verifiable yet, notwithstanding even our original successful development unit is still operable today 6 years on. From the outset though we have striven to develop systems based on our own needs in small business. That is simplicity, reliability, consistency whilst using real world fuels being the key design drivers. We have done so on a broken shoe string basis, so development designs when implemented were often sub optimal from a long term operational view point because of budget constraints, useful in testing core design elements but caution called for in terms of a commercial implementation without beefing up a range of components. Need 6mm steel sides? 2mm gets used because it was in the seconds bin at the steel supplier for peanuts. Minimum refractory thickness recommended would get shaved and shaved again. Need a purpose designed fan? A cheap Chinese made "off the shelf" would be what we would end up with (though we have have become adept at changing bearings to quality C3 or C4 heat tolerant types). Build looks complex, or need specialist fitters? Back to the drawings, tweak this, reshape that, simple folds, easier seam welds etc etc. It was at one level frustrating, but in hindsight now we realize what a unique approach we ended up with, intense pressure to innovate solutions and then innovate again. So much in design & fabrication gets over engineered or becomes unnecessarily complex with add on "solutions" treating the outputs of poor core designs, instead of fixing the core in the first place. What we have done over the last seven years is work out the real lower material limits and design parameters, not estimate them. Along the way the designs have matured into ones suited for mass fabrication. If our drivers and work method was the plan then lean, mean and functional has been the outcome. This year and into early 2015 we have several systems going into commercial settings under real world economic arrangements. That is non subsidized in a tough economic and policy environment and at a discount rate on Business as Usual (BaU). The VP being built around superior waste re-purposing, integration with existing site management and work force, avoided power & heating costs and external energy market volatility resilience, finally new product opportunities that the presence of a reliable gasifier generates. Most importantly matched with a financial model based on "seamless" acquisition in requiring minimal capital injection with the system being paid predominantly out of existing operational budgets through lease arrangements (adding a little more in the VP through leveraging tax policy), ultimately making the decision for the client similar to comparing savings from changing electricity supplier for example... In short not just maturing the product designs but maturing our own business. Indeed the latter is I think Spanners great strength. These gasifier systems range from 15kWe to 500kWe capable modules, the latter for 2MWe plants. All of these have survived the manipulations of dodgy industry scam artists seeking to piggy back off our success (claiming to have the design) or steal our IP, quite apart from extensive technical & financial due diligence and in the case of the industrial scale plant conducted at a much higher level than what what might be the case for other options like combustion boiler systems, and with regulatory authorities perched close to the shoulder. Indeed in one case the large client company involved informed us (after exchanging contracts locking us in as their suppliers) that two of the senior managers sent to view the development plant were in fact under instructions to report negatively, unless it was extraordinarily to a level above and beyond what would be reasonable to ignore, in practice backing such a decision against their future careers. What other industry has such a tough sell? Amongst all this is one 250kWe system which we have tentative agreement with the client to use as a reference system for others to view, study the performance of and publicly report. Will advise when this is fully commissioned and available. It would be nice after all the years to answer your original question with more definition, it is the one criticism that we have suffered over here that only more time will address since the commercial iterations are only just now going out. We are nonetheless actively working towards it, we know where we have come from, what we have been through and where we are going, and the numbers presented on this list in terms of alternative system cost and performance give us great hope for a place in the future. Kind regards, Peter On 21/09/2014 4:49 AM, Tom Miles wrote: Larry, Thanks for the information about the Borealis/Spanner. The general question is, what are the economic circumstances that make small scale gasification worthwhile? If I understand the German farm market correctly there is, as you indicate, a financial incentive to generate heat. Also I understand that If you are on the grid and generate power in Germany you must sell to the grid but you receive favorable rates. Assume 6500 hrs/year Spanner requires that you run the gasifier system at a minimum of 80% capacity (i.e. no load following) to run reliably with no tars, etc. 80% x 6500 = 5,200 at full capacity equivalent. 5200 hours/8760hrs/yr = 59% capacity factor (% of potential full load/year). 5200 hours x 100 kWhth = 520,000 kWhth/yr 5200 hrs x 45 kWe = 234,000 kWhe/yr Assume that a customer is heating with oil or propane in New Hampshire At $25-$34/MMBtu. Assume 80% efficiency or $31/MMBtu for oil and $43/MMBtu for propane. http://www.nh.gov/oep/energy/energy-nh/fuel-prices/index.htm $31/MMBtu / 293 kW/MMBtu = $0.10/kWhth x 520,000 = $55,017/year displaced oil $43/MMBtu / 293 kW/MMBtu = $0.10/kWhth x 520,000 = $76,314/year displaced propane Electricity in NH is reported at $0.1531/kWh $0.1531/kWh x 234,000 kWh/yr = $35,825/yr Total potential heat and power offset $112,139/yr for propane and $90,842/yr for oil. The system could consume about 234,000 kg wood at 0.95 kg/kWhe (23% efficiency), 222 tonnes or 244 short tons. Assume a delivered fuel cost of $60/ton, or $15,000/year. So the gross benefit of the gasifier-genset (with net metering) for a farm or nursery in New Hamphsire would be about $97,000/year for propane and $76,000 for oil. Assume about $8,000 for labor (10 hours/week x 40 weeks) and $12,000/year for repairs (3% x $400,000). Total fuel, labor and repairs $35,000. So that gives us a margin for ownership of $77,000/year for propane and $56,000/yr for oil. So 6-8 years payback, except that these small systems always cost a lot more than you think. If we apply German conditions at EUR 1.40/litre for a diesel, USD $1.79/l (1.28 USD/EUR), 10 kWh/l (36.4 MJ), 80% efficiency, heating with diesel would cost about $0.224/kWh. Electricity at EUR $0.20/kWh would cost USD $0.26/kWh (1.28 UD/EURO). Gross benefits for substituting oil would be: Thermal - $0.224/kWh th x 520,000kWh = USD $116,480 Electric - $0.26/kWh e x 234,000 = $60,840 Total $177,320 If you can use all the heat and sell all the power then benefits in Germany are almost twice those in the US ($177,320/$90,842). If my assumptions are reasonable the net payback would be about 3 years in Germany compared with diesel. I have heard that Spanner's customer service is excellent. They reportedly meet with owners (250+) once every three months. That is unheard of in small scale gasification. It means that they can attend to Thomas Koch's "baby" when it cries. (Thomas told us that you must be no more than 1 km away from your "baby" gasifier for every hour that you can leave it without crying.) These factors combine to make well supported small scale gasification feasible in Germany. The US would seem to be a greater challenge. At the industrial scale low cost oil and gas from fracking has killed a lot of biomass projects. Will this be true of small scale systems? Or will previous projections of increased prices for diesel and heating oil favor biomass gasification? Tom From: Gasification [mailto:[email protected]] On Behalf Of Larry Gooder Sent: Thursday, September 18, 2014 11:49 AM To: [email protected]<mailto:[email protected]> Subject: SPAM: [Gasification] Borealis / Spanner RE2 CHP Tom Borealis Wood Power is the North American distributor of the Spanner Holz-Kraft CHP that delivers 45kWe and 110 kWt As to make a decent ROI we need to have the end user to have a need for 6,500 hours or more of the demand. Spanner RE2 is over the 250 unit mark in the European Union market and the large majority of these are 7,000 plus hours/year customers. And as noted some of the countries have a premium feed in tariff and that helps on the electrical side, but the thermal has to be considered first. I get regular e-mails and phone inquiries from people who want to explore generating electrical power using their wood chips, but when asked what they are going to use the thermal for, they draw a blank, as they were only considering the electrical side. Competing with more expensive and highly fluctuating cost fuels as propane or oil there is a good ROI and electrical generated heat comes in as well. The overall efficiency of the plant, using wood chips with moisture content of 13%, thermal efficiency: 56.1% and electrical efficiency of 23.3%. Our full scale demonstration plant is running at our facility in Burlington Ontario Canada (40 minutes from Toronto International Airport) and welcome you to come and have some hands on experience. Larry Gooder Enthusiastically, Larry Gooder O: +1 905 319 0404 x 2 C: +1 519 671 6153 [LOGO_final] _______________________________________________ Gasification mailing list to Send a Message to the list, use the email address [email protected]<mailto:[email protected]> to UNSUBSCRIBE or Change your List Settings use the web page http://lists.bioenergylists.org/mailman/listinfo/gasification_lists.bioenergylists.org for more Gasifiers, News and Information see our web site: http://gasifiers.bioenergylists.org/ -- Peter Davies Director ID Gasifiers Pty Ltd Delegate River, Victoria Australia Ph: 0402 845 295
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