AEA’s Oliver Edberg discusses opportunities for biomass heating solutions: presentation slides from the Carbon Show (October 23, 2012) in London. With the inclusion of biomass sustainability standards in the Renewable Heat Incentive (RHI) scheme, there are questions around how this might affect the associated costs and efficiency of installed biomass boilers. Oliver shares AEA’s insight into the RHI. His presentation will cover the latest developments in the biomass industry and provide an overview of the advantages of integrating boilers into a business energy strategy. The Carbon Show is an annual event for sustainability professionals from industry, government, energy and finance who are working to increase energy efficiency and meet UK and European emissions targets. Oliver’s presentation will feature in the event’s green technology seminar programme. Oliver has been involved in the renewable energy sector for a number of years working on biomass and renewable heating technologies. During this time he has supported a range of AEA projects including the company’s work on the RHI for DECC, and for Ofgem on the auditing of RHI installations. In addition, Oliver has undertaken technical assessments and monitored a range of biomass heating projects (50-15000kWth) on the UK and South West Bio-energy Capital Grants programmes. He has also been involved in the development of the Bio-Energy Assessment Tool and undertaken several studies for the Environment Agency on biomass lifecycle emissions.

1. Oliver Edberg – 23rd October 2012
Opportunities For Biomass
Heating Solutions

2. Major provider of
environment and energy
consultancy and advice
to the private sector
Advised DECC on
Global bio-energy resource,
RHI, FIT, CRC
Auditor for the RHI scheme
CHP Quality Assurance
Guidance on Air Quality &
Biomass
Bioenergy Capital Grants
Scheme
South West Biomass Capital
Grants Scheme
AEA

3.  Biomass heating under the RHI
 What is biomass?
 When is biomass heating attractive?
 Points to be aware of when considering
biomass:
 Fuel Supply
 Air Quality
 Sustainability
Overview

4. RHI Installations
0
50
100
150
200
250
300
350
400
0
20
40
60
80
100
120
Biogas Solid
Biomass
Boiler
Deep
Geothermal
GSHP Municipal
Solid Waste
Solar
Thermal
WSHP Bio-Methane
No
of
installations
Capacity
(MW)
Installed Capacity (MW) No of installations
Source: Ofgem public RHI report (based upon accredited sites up to October 2012)

5. RHI Tariffs Table
Tariff Name Eligible Technology Eligible Sizes Tier New tariff (pence/
kWhth) - from
1.4.12
Small Commercial
biomass
Solid biomass
including solid
biomass contained in
municipal solid waste
(incl. CHP)
Less than 200
kWth
Tier 1 8.3
Tier 2 2.1
Medium
Commercial
Biomass
200 kWth and
above; less than
1,000 kWth
Tier 1 5.1
Tier 2 2.1
Large Commercial
Biomass
1,000 kWth and
above
N/A 1
Small Commercial
heat pumps
Ground-source heat
pumps; Water Source
heat pumps; deep
geothermal
Less than 100
kWth
N/A 4.7
Large Commercial
heat pumps
100 kWth and
above N/A 3.4
All solar
collectors
Solar collectors Less than 200
kWth
N/A 8.9
Biomethane and
biogas
combustion
Biomethane injection
and biogas
combustion, except
from landfill gas
Biomethane all
scales, biogas
combustion less
than 200 kWth
N/A 7.1

6. Why is biomass attractive?
 The economics of biomass heating under the RHI are favourable under the
right conditions.
 Illustrative example in table below, site specifics influence cost significantly
Assumptions:
Boiler size 500kW
Gas 3p/kWh
Oil 5.5p/kWh
Woodchip 2.1p/kWh
Pellets 4.3p/kWh
Additional
CAPEX
Biomass fuel
cost
Fossil fuel
cost
Fuel
saving
RHI
payments
Tier 1
RHI
payments
Tier 2
Annual
saving
Simple
Payback
Biomass wood chip
v natural gas £202,500 £16,050 £22,500 £6,450 £33,507 £1,953 £41,910 4.8
Biomass wood pellet
v natural gas £202,500 £32,550 £22,500 -£10,050 £33,507 £1,953 £25,410 8.0
Biomass wood chip
v oil £202,500 £16,050 £41,250 £25,200 £33,507 £1,953 £60,660 3.3
Biomass wood pellet
v oil £202,500 £32,550 £41,250 £8,700 £33,507 £1,953 £44,160 4.6

7. Proposed New Developments Under RHI
Consultation on proposed introduction of ‘new technologies’
(response deadline 7th December 2012):
Biomass and Bioliquid Combined Heat and Power
Heat from biomass CHP of 4.1p/kWh based on our current evidence.
Biomass CHP to include bioliquids at the same tariff of 4.1p/kWh.
Must meet CHPQA requirements
Biomass Direct Air Heating
Tariff of 2.1p/kWh under 1MW.
Tariff over 1MW of 1p/kWh or less.

8. Biomass heating: Types of Drivers
 Reduce energy bills
 Invest capital and generate financial returns
 Reduce greenhouse gas emissions
 Improve corporate image
 Enhance energy security
 Address fuel poverty

9. Biomass Heating: Types of Risk
 Financial risks, capital costs, energy prices, credit risks and
inflation
 Development risks, the costs of undertaking feasibility and the risk
of planning
 Construction risks, construction costs and long lead in times
 Technology risks, particularly around efficiency and reliability of
the technology
 Operational risks, operational and maintenance costs, fuel
availability
 Policy risks, changes to renewable energy policy and incentive
structures = investment returns

10. What is biomass? – Fuel Characteristics
Feedstock Issues Alternative markets
Virgin wood
pellet
Premium fuel suitable for all applications but expensive. Handles and
burns predictably. V low ash. Internationally traded commodity. Closest
Bioenergy gets to oil convenience
None
Virgin Wood
chip
Not all virgin wood is same quality/ specification.
Price influenced by specification and processing.
Paper sector; Furniture
Construction; Panel board
Energy Crops Not suitable for very small boilers due to ash sintering:
Miscanthus has high ash content.
Alternative use for land for other
agricultural crops.
Miscanthus: equine bedding
Agricultural
residues (dry)
Straw - high alkali metal and ash content, not suitable for smaller boilers
Variable resource – price lower than wood but harvest & weather
dependent
Animal Bedding; some agricultural
residues are used in animal feed.
Food residues Consider Anaerobic Digestion for wet residues.
Storage of waste products on a food production site (smell, degradation,
vermin). Too wet for combustion
Animal feed
Waste wood Level of wood treatment such as fungicides and paints. Treated wood
falls under the Waste Incineration Directive
Dust may be an issue in processing. Low price
Animal bedding & mulch (high
value markets)
Panelboard (for better quality
waste wood)
Mixed waste,
SRF
Only biomass content eligible for incentives and biomass content difficult
to demonstrate.
Chlorine content, high ash, metal content, variable CV.
Low or negative price
Often already in long term
contract to landfill or incineration.
SRF production increasing - may
be opportunities.

11. Specific issues for biomass
 Wide range of biomass fuels
BUT characteristics differ and influence processing
and conversion
 Clear specification of fuel is important
 The larger the boiler the more fuel
flexible it is.
 Feedstock properties
 Storage facilities are important
Need to consider degradation, dust, sparks, self
heating and contamination in storage
 Air Quality
Laxå Sweden (2010) Collapse of storage
silo due to a fire. The silo collapsed
because the fire was put out by water that
made the pellets swell.
Internal heating resulting in fire in pellet
storage
Images courtesy of IEA
Bioenergy Task 32

12. Choice of Project Site
 Highest heat utilisation rate – best payback and
system performance
 Type of fuel replaced – sites using LPG and oil are
best to replace in terms of financial savings and
payback, but replacing gas now effective due to the
RHI
 Feedstock
 Regional capacity
 The fuel will need to be processed/seasoned – how
will it arrive from the supplier
 Available space and access – sufficient room for
boiler to be housed and feedstock to be stored and
accessed
Heat demand
Cost
of
fuel
Increasing
biomass heating
suitability

13. The impact of fuel type, size and load factor on the
cost of heat
Domestic small commercial large commercial large industrial
Size 15kW 140 500 5000
Fuel mix 100% pellets Pellets or clean
chips
100% Clean chips 70% Clean
chips/30% waste
chips
Capex £/MW
installed
620 523 387 288
Load factor 20% 30% 30% 60%
Typical cost of
heat
12 9.5 6 2.4
The cost of biomass heating is a strong function of
scale

14. Biomass boiler examples
Step grate system Batch fired log boiler

15. Fuel Delivery

16. Fuel Storage

17. Fuel risk mitigation
 Financiers see supply and price as major risk factors in plant
development. Cost of risk may have major impact on
development costs
 To decrease risk contractual negotiation should consider:
 Need to secure supply over long term
 Contracts aimed at mitigating risks for ALL parties:
 Need to ensure supplier can meet their costs, the need for investment in infrastructure and
achieve attractive margin
 Need to recognise that suppliers costs may change with time, as may market for biomass
 Other fuel risk mitigation options:
 Spread supply across three or four suppliers
 Build in flexibility for storage at peak times
 Build in re-negotiation clauses triggered by changes in price indexes or on an annual basis
 Include some option to buy on spot market
 Build in flexibility to use different fuels in conversion stage

18. Fuel costs per kWh
From Biomass Energy Centre Website

19. UK Bioenergy demand: Past and projection
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2005 2006 2007 2008 2009
Million
ODT
per
annum
Cofiring
Biomass
stand alone
electricity
Industrial
heat
Domestic
heat
Data source: derived from DUKES
Planned large biomass electricity projects
are all looking to source biomass from
overseas
0
1
2
3
4
5
6
7
2010 2020 2030
Million
ODT
per
annum
Data source: Adapted from ‘The UK Supply Curve for Renewable
Heat’ NERA/AEA 2009
Large growth in biomass (a 6.6 fold increase) for heating but
quite small in terms of the potential resource
Projected wood fuel use under the RHI

20. UK Biomass Supply to 2030: total UK biomass potential
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2010 2015 2020 2025 2030
Million
ODT/p.a
UK Biomass resource including waste
wood and energy crops
Energy Crops
Waste wood
UK forestry
derived resource
Projected
biomass heating
RHI
Source: Results based upon research conducted by AEA for DECC (2011),
report publically available from DECC’s RHI webpage

21. Compliance with air quality legislation
 Right place
in AQMA planning requirements will be stricter
in Smoke Control Area must be exempt appliance
less impact in rural areas
 Right kit
Low emission technology
Clean high quality fuel
Larger boilers with enhanced cleanup
Best configuration and operation – log boilers need accumulators.
 Right abatement
>45.4 kg wood combustion/hour must be agreed with Local Authority
 Right chimney
>45.4 kg wood combustion/hour height must be agreed with Local Authority
Sufficient height to disperse emissions adequately, may need calculation

22. Guidance for LAs (and everyone else)
www.lacors.gov.uk

23. Sustainable fuels and the RHI
 Bioenergy could contribute over 33% of the predicted seven-fold growth in
renewable heat by 2020
BUT
 It must be Environmentally SUSTAINABLE
 The need for sustainability is recognised and accepted by policymakers – incentives will not be
paid for unsustainable fuel and corporate reputation could suffer.
 Requirements of RHI
 Sustainable feedstocks will be a requirement of the RHI for all boilers over 1MW output.
 Initial compliance is by reporting only with mandatory compliance and sanctions from 2013
 Non compliant fuel will equal loss of incentive payments and damaged corporate reputation
Sustainability is a significant regulatory risk to the business

24. Sustainability risk of some fuels
Risk of excessive impact
from land use change
Risk of excessive
impact from Life cycle
GHG balance
Wood chip from N America low low
Pellets from N America low medium
Small round wood from UK woodland low low
EU grown and processed wood
products
low low
SE Asia/ undetermined origin high medium
Waste derived fuels zero zero
Agricultural residues zero zero

25. RHI sustainability
 Ofgem regulate RHI, including sustainability
 Reporting requirements for RHI are for schemes
>1MWth:
Type of biomass
Format e.g. pellet
Mass/Volume
Whether or not it is a by-product/residue
Country of origin
Does it meet an Environmental QA scheme (energy crops only)

26. Sustainability Proposals in RHI Consultation (1)
 The greenhouse gas (GHG) emissions target for the lifecycle
assessment of biomass heat should be 125.28 kg CO2eq per MWh
 For woodfuel the ‘land criteria’ should be as set as the criteria used
for the UK public procurement policy for timber,
 For non-wood fuel the ‘land criteria’ should be as set out under the
Renewable Energy Directive
 Perennial energy crops planted to meet the sustainability
requirements set under the Energy Crops Scheme for England, or
its equivalent, should be considered as meeting the land criteria
 The use of wastes for heat generation should be exempt from the
sustainability criteria

27. Sustainability Proposals in RHI Consultation (2)
 To develop a registered suppliers scheme to provide a simple route
for smaller biomass heat installations to demonstrate they meet the
sustainability criteria
 To require biomass heat installations below 1 MWth to meet the
sustainability criteria from April 2014
 As part of the approved supplier list a level of boiler efficiency
should be assumed
 The use of woody biomass sourced from the same estate as where
the boiler is housed should be deemed sustainable, and this should
be managed through a simple registration process

28. Sustainability Positives
 Sourcing from the locality strengthens company/ community links.
 Wood fuel creates employment in local forestry and agriculture and as a
result wealth in the local community. There is no revenue leakage from
the locality.
 Managing woodland for fuel is positive for its ecology. Opening the
canopy increases biodiversity.
 All of the above can be used to enhance corporate reputation
 A good neighbour?
 A carbon neutral company?
 Working together with your local community?

29. Conclusions
 Biomass is a growing market
 Not suitable for every organisation but can be highly attractive in
reducing carbon, energy bills and for PR.
 Consider alternative fuel options, particularly any wastes or residues
you produce
 Be flexible in fuel capability with your equipment choice if you can
 There are risks, but you should be able to adopt strategies to
mitigate against them
 Fuel prices may vary but you should be able to negotiate contracts
for large proportion of supply that mitigate against price fluctuations
for all parties
 Do not ignore sustainability – it will become increasingly important

30. QUESTIONS PLEASE

31. AEA
Oliver Edberg
Senior Consultant
AEA
Marble Arch Tower
55 Bryanston Street
London
W1H 7AA
Tel: +44 (0)870 190 2945
Mob: +44 (0)7425622772
E: oliver.edberg@uk.aeat.com
W: www.aeat.co.uk
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